The income tax department may cap at Rs 10 lakh the amount of cash a person can keep at home or carry in transit in a likely budget proposal aimed at checking black money.
The tax authorities also propose to make furnishing of PAN (personal account number) mandatory in case of high-value purchases, which could be fixed at Rs 1 lakh, sources have told HT.
Strict penalties, being worked out, would be slapped if unaccounted cash in excess of Rs 10 lakh was recovered, sources said. Tackling black money was part of the BJP’s manifesto for the summer’s Lok Sabha election that saw it being voted to power. The Supreme Court has appointed a special investigating team (SIT) to conduct a thorough probe into black money stashed abroad by Indians.
“The threshold amount has been devised after careful consideration so that carrying on the day-to-day activities of ordinary citizens is not affected, a SIT source said. “This will also curb the movement and transportation of cash from one destination to another.”
Though the focus of the black-money campaign has been illicit funds stashed abroad, activists and experts have often pointed to the growing menace at home.
At present, there is no prescribed limit on the amount of cash an individual can hold in hand. It has led to arbitrariness in asking the individuals about the source of the cash though certain parameters such as the standard of living are taken into account.
“The cash threshold limit seems to be a fair move. While it should work out fine in urban areas, it remains to be seen how the threshold limit works out in rural areas which do not have access to good banking channels,” Jayesh Sanghvi, an expert on tax laws, said.
The proposed change would enable enforcement agencies to act against violators as well as seize unaccounted currency, he said.
The Central Board of Direct Taxes (CBDT), the apex board for direct tax collection, also wants PAN to be mandatory for purchases of Rs.1 lakh and above.
If the buyer doesn’t have a PAN number, any of the documents accepted by the government’s as proof of identity such as Aadhaar number would be acceptable. The seller, too, would have to enter PAN number in the invoice, sources said.
These proposals were part of the SIT’s recommendations submitted to the SC in December.