In a bid to curb black money, the government is actively considering SIT’s recommendation of banning cash transactions of over Rs 3 lakh, CBDT chairperson Rani Singh Nair said on Wednesday.
Once approved, any cash transactions of Rs 3 lakh and above would be deemed illegal. To keep or hold cash above Rs 15 lakh, one would need to take the permission of the area tax commissioner.
“These recommendations have come. It (banning cash transactions over Rs 3 lakh) is under examination. SIT recommendations are under consideration,” she told reporters on the sidelines of an Assocham event here.
Sources in the department said the matter will be put forward for an approval of finance minister Arun Jaitley before it is notified.
The 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 Income Tax department, she said, has already put a 1% TCS on cash transactions and made quoting of PAN mandatory, among other measures to curb black money in the system.
“All these aspects are part of SIT recommendations to stop use of cash in the economy,” she added.
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.
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, the SIT had also recommended that special permission of the commissioner of income tax of the area be taken in case anyone needs to hold cash in excess of the prescribed amount.