Through the Finance Act 2017, the department of Income Tax has put a ban on cash transactions equal to or over Rs. 2 lakhs with effect from the start of the new financial year i.e. April 1, 2017.
Reiterating on similar stance, the department has warned people against engaging in cash transactions valued 2 lakh and above. Also, as a penalty for the unlawful dealing, the receiver of the amount in cash of Rs. 2 lakh or more shall be levied with the same amount as penalty.
The provisions in respect to the cash transactions has been stated in the newly included section 269ST of the Income Tax Act which puts a ban on such huge transactions in a day or in a single transaction or transaction on account of a single event.
In leading dailies, the department has advertised that "Contravention of Section 269ST would entail levy of 100 per cent penalty on receiver of the amount". The move is part of the Modi government's effort to combat black money transactions and promote digital transactions.
The restriction with respect to cash transaction does not includes receipts by banking company, government , post office or cooperative bank its scope.
Further the department has asked individuals with any information on the matter to tip off by writing a mail to the tax department for the likely illicit money.