The Income Tax (IT) Department has warned against excessive cash transactions and violations would trigger heavy penalties upto 100% for cash transactions exceeding specific thresholds. “Say “yes” to digital and “no” to cash” is the new mantra tax department is heavily promoting to plug tax leaks and unaccounted income.
The taxmen are promoting digital payments to reduce reliance on cash for businesses with turnover exceeding Rs 50 crore must facilitate digital payment methods like UPI, NEFT and RTGS warning of daily penalty of Rs 5,000 for failure to comply with regulations.
“The government aims to reduce the risks of unaccounted money by discouraging cash transactions. Taxpayers are encouraged to adopt digital financial systems for seamless and compliant transactions and avoid penalties,” explained a senior tax official urging to limit use of cash in daily transactions.
The tax authorities issued fresh reminders before the union budget on the perils of the exceeding cash transaction limits would result in disallowed deductions and penalties equal to the cash amount.
According to the IT rules, repaying loans, deposits, or specified advances in cash cannot be exceed Rs 20,000 except for transactions involving the government, banks, and notified institutions. The tax rules prohibit accepting cash exceeding Rs 2 lakh from an individual in a day, for a single transaction, or multiple transactions linked to one event and applies even to fees, donations or related-party transactions.
