The government's stand on allowing loan repayment in cash if the monthly EMI is less than Rs. 2 lakhs comes as part of the July 3rd notification. The notification further exempted 5 of the entities from the section 269ST purview which restricted cash dealings of Rs. 2 lakh and above to curb black money generation and other illicit practices in the system.
These 5 entities include receipts that an individual appointed as banking correspondent receives on behalf of a cooperative bank or bank; receipts against credit card bill payments by the credit card issuing company; receipts which cannot form the part of total income as per clause (17A) of Section 10 of the Income Tax Act 1961; cash amount received by operator of white-label ATM from retail outlet; and receipt from an agent by an issuer of prepaid payment instruments.
The prohibition of cash transactions of Rs. 2 lakh or more was made effective from April 1, 2017. And those found violating the provisions, were levied a penalty equal to the amount received.
As per the revenue department's notification, the provision shall be applicable from April 1, 2017. The department in an earlier instance exempted the clauses of Section 269ST receipts by banking company, post office, cooperative bank and government.
Also, any information on such cash transactions valued over Rs. 2 lakhs were asked by the tax department to be tipped -off to them on the newly started e-mail address firstname.lastname@example.org. At a later instance, government also asked sources with knowledge on conversion of black money to white money to inform the department via this e-mail ID.