Cash transactions above 3 lakh set to be banned

NEWDELHI: The special investigation team (SIT) on black money wants cash transactions of over Rs 3 lakh banned and individuals restricted from holding more than

NEWDELHI: The special investigation team (SIT) on black money wants cash transactions of over Rs 3 lakh banned and individuals restricted from holding more than Rs 15 lakh in cash, suggestions made in its fifth report to the Supreme Court.

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“The SIT’s recommendation is to limit cash movement as we move towards the objective of a cashless economy and curbing the growing black economy… We are waiting for public comments before we take a view on implementing these suggestions,” revenue secretary Hasmukh Adhia said Thursday.

The finance ministry said in a statement, “Having considered the provisions that exist in this regard in various countries and… various reports and observations of courts regarding cash transactions, the SIT felt there is a need to put an upper limit onn cash transactions.”

The curbs could have a big impact on jewellery and real estate markets — among the bigggest blackmoney recipients due to their high-value cash deals.

Existing steps to curb black money — mandatory quoting of PAN on cash deals above Rs 2 lakh, sale/purchase of immovable property worth more than Rs 10 lakh, hotel and restaurant bills of Rs 50,000 and above, purchase of gold jewellery above Rs 2 lakh, and buying and selling Rs 1 lakh worth of shares of an unlisted company — are also focused on these sectors. All these restrictions are based on SIT recommendations, too.

Seeking the ban on cash transactions above Rs 3 lakh, the SIT called for “an Act (to) be framed to declare such transactions illegal and punishable under law”.

In fact, legislative changes are required for both suggestions to be implemented, Adhia said, indicating that it could be awhile before these become part of the system.

HT had reported on May 20 that curbs on cash deals may be coming. In an interview with this paper, Adhia had said limiting cash transactions would “strengthen archaic laws and improve enforcement action”.

The ministry statement said the SIT had taken into account the big cash recoveries made by law enforcement agencies from time to time, and it had concluded that the cash-transaction limit would succeed if there was a similar cap on cash holdings. For people and entities who wished to keep more than Rs 15 lakh in cash, the SIT suggested making it mandatory for them to get the permission of the area’s commissioner of income tax.