In a bid to curb black money, the government is considering a recommendation of the Special Investigation Team (SIT) to ban cash transactions of over ₹3 lakh, Central Board of Direct Taxes (CBDT) chairperson Rani Singh Nair said on Wednesday.
Once approved, any cash deals of ₹3 lakh and above would be deemed illegal. To keep or hold cash above ₹15 lakh, one would need to take the permission of the area tax commissioner.
HT reported first on May 20, that the government was planning to declare cash transactions above a certain amount “illegal”.
“These recommendations have come. It (banning cash transactions over ₹3 lakh) is under examination. SIT recommendations are under consideration,” Singh said.
Sources in the department said the proposal will be put up for finance minister Arun Jaitley’s approval before notification.
Taxmen had called for public comments on the proposal, and sources said the comments till now do not indicate any reluctance, thereby strengthening the case for notifying the ban.
The tax department, Singh said, has already levied a 1% tax collected at source (TCS) on cash transactions and made quoting of permanent account number (PAN) mandatory, among other measures, to curb black money.
The SIT, headed by Justice MB Shah (retired), last month submitted its fifth report to the Supreme Court on steps needed to curb black money.
“Having considered the provisions which exist in this regard in various countries, and also having considered various observations of courts regarding cash transactions, the SIT felt that there is a need to put an upper limit to cash transactions,” the SIT said.
It recommended a total ban on cash transactions of ₹3 lakh, and said for those above that, “an Act should be framed to declare such transactions as illegal and punishable under law”.