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The Central Board of Direct Taxes (CBDT) has exempted certain cash transactions from the purview of the ₹2-lakh restriction introduced in this year’s Budget as part of efforts to promote the digital economy.
The Centre had, through the Union Budget, banned cash transactions of ₹2 lakh or more from April 1, 2017.
Five categories of transactions have now been kept out of this restriction through an executive order from CBDT, issued on Monday.
These are: money received by a business correspondent on behalf of a bank or cooperative bank; receipt by a white label ATM operator from retail outlet sources on behalf of a bank or cooperative bank; receipt from an agent by an issuer of prepaid instruments; and receipt by a company or institution issuing credit cards against bills raised in respect of one or more credit cards. Also, money received on account of an award or reward instituted by Central or State government would now not be covered under the ₹2-lakh cash transaction limit.
Digital transactions Reacting to the latest CBDT move, Naveen Surya, Chairman, Payment Council of India (PCI), said: “PCI appreciates this CBDT clarification, which acknowledges prepaid instruments’ role in digitising physical cash transactions.”
This will help the country digitise transactions and bring people who are using only cash as a medium into the digital fold, he said.
By this clarification, CBDT has ensured that agents’ aggregating money received from various customers and depositing with the prepaid card issuer will not be misinterpreted as violation of the norms, Surya said. “There was a potential risk of it being viewed differently by authorities. However, this has now been sorted out by the CBDT.”
Amit Singhania, Partner at law firm Shardul Amarchand & Mangaldas, said the CBDT move to exempt certain transactions from Section 269 ST is a welcome step, as it has spared certain genuine transactions from the norm.
Budget move In the 2017-18 Budget, Finance Minister Arun Jaitley had proposed to ban cash transaction of over ₹3 lakh.
This limit was lowered to ₹2 lakh as an amendment to the Finance Bill, which was passed by the Lok Sabha in March.
The restriction is not applicable to any receipt by government, banking company, post office savings bank or cooperative bank, the tax department said.
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