The government is examining Special Investigation Team’s (SIT’s) recommendation of banning cash transactions of over Rs. 3 lakh in a bid to clamp down on black money in the economy, Central Board of Direct Taxes (CBDT) Chairperson Rani Singh Nair said on Tuesday.
The move follows Supreme Court-appointed SIT on black money recommending banning cash transactions of Rs. 3 lakh and above and restricting cash holding with individuals and industry to Rs. 15 lakh to curb illegal wealth in the country.
“These recommendations have come. It (banning cash transactions over Rs. 3 lakh) is under examination. SIT recommendations are under consideration,” she said on the sidelines of an Assocham event in New Delhi.
The Income Tax Department, she said, has already put a 1 per cent tax collection at source (TCS) on cash transactions and made quoting of PAN mandatory.
“All these aspects are part of SIT recommendations to stop use of cash in the economy. Suggestion on Rs. 3 lakh and above is under consideration,” she said.
The SIT, headed by Justice M.B. Shah (retired), last month submitted its fifth report to the Supreme Court on steps needed to curb black money.
Noting that a large amount of unaccounted wealth is stored in cash, the SIT said, “Having considered the provisions which exist in this regard in various countries and also having considered various reports and observations of courts regarding cash transactions, the SIT felt that there is a need to put an upper limit to cash transactions.”
It recommended a total ban on cash transactions of Rs. 3 lakh and above and that “an Act be framed to declare such transactions as illegal and punishable under law.”
Suggesting an upper limit of Rs. 15 lakh on cash holding, SIT had stated that special permission of the Commissioner of Income Tax of the area should be taken in this regard.
