Cash of over ` . 2 lakh can be used to pay credit card bills, with the Central Board of Direct Taxes relaxing norms that barred such transactions exceeding this amount. The limit will also not apply to business correspondents appointed by banks, issuers
of prepaid instruments and some loans.
The Finance Act of 2017 had banned cash transactions of ` . 2 lakh or above with effect from April 1, 2017 in respect of a single transaction or transactions related to one event or occasion by an individual. The restriction was another measure to curb black
money and violation would invite a penalty of 100% of the amount involved on the receiver of cash.
However, the apex direct taxes body has notified five carve has notified five carveouts to address genuine difficulties, providing relief to banks and rural borrowers.
Cash payments towards loan repayments shall not be aggregated for the purpose of determining applicability of this norm.This would be for loan repayments to nonbanking financial companies and housing finance companies.
Cash received as part of government awards would be out of the purview of this norm.
The CBDT has excluded receipts by a busi ness correspondent on behalf of a banking company or cooperative bank and receipts by white label automated teller machine operators from retail outlet sources on behalf of a banking company or cooperative bank.
Receipts from an agent by an issuer of pre-paid payment instruments will also be excluded, according to the notification.
The changes shall be deemed to have come into force with effect from April 1, 2017, the revenue department said in a notification dated July 3.
“The amendment to section 269ST rationalises the section by excluding certain payments which ideally should not be covered,“ said Amit Maheshwari, a partner at Ashok Maheshwary & Associates LLP.
He said one has to keep in mind that the source of cash can be questioned and adequate documentation needs to be kept at all times to validate the origin of the funds. - www.economictimes.indiatimes.com [05-07-2017]