March 21, 2017
The government decided on Tuesday to lower the legal limit on cash transaction from Rs 3 lakh to Rs 2 lakh, and make Aadhaar number mandatory for filing income tax returns and while applying for a PAN card through amendments to the finance bill.
The amendments specified that failing to provide Aadhaar will lead to the PAN becoming invalid.
The Budget 2017 had proposed cash transactions of more than Rs 3 lakh value be banned but the finance bill tabled on Tuesday lowers the ceiling, said revenue secretary, Hasmukh Adhia.
“The difference between demonetisation and this is that the former is used to destroy the stock of black money while the ban will prevent the future flow of black money. If you cannot transact beyond a limit in cash, where will you use your black money? This limit will also reduce the quantum of cash transactions in the economy” Adhia had told HT.
And to ensure that this law acts as a deterrent, the penalty for violation is equivalent to the amount transacted.
The finance bill also makes Aadhaar must for tax returns and PAN applications beginning July 1. Sources suggest that having an Aadhaar enrolment number while filing ITR could also be accepted.
The move is likely to roil activists who say the Aadhaar programme – the enrolment to a national database with biometric information such as fingerprints and iris scans – is meant to be voluntary, as declared by the Supreme Court in September last year.
“Aadhaar has been optional for ITR for the past few years. The challenge will be for foreign nationals who pay taxes in India. We will have to see the amendment to understand its implications,” said Kuldip Kumar, leader, personal tax at PwC India.
The amendment also specifies that the government will notify those who are exempted from this law.
The finance bill carries an unprecedented 40 amendments, according to PTI, and will also impact other laws such as RBI act and representation of people act. Political parties hit out at the tweaks, saying they were being done as ‘backdoor entry’.
The finance bill is classified as a money bill, which does not require bicameral approval and can be approved by the Lok Sabha alone where Prime Minister Narendra Modi’s BJP has a majority.
The Budget presented in February proposed a Rs 3-lakh limit on cash transactions, in keeping with recommendations of the Special Investigation Team (SIT) on black money.
In addition to this limit, the Income Tax Act prohibits making or accepting payment of an advance of Rs 20,000 or more in cash for purchase of immovable property. PAN is also mandatory for any purchase of above Rs1 lakh.
[The Hindustan Times]