Limit on Cash transactions in Business

Cash is the only source by which tax evasion, Black money and other business frauds happen, so it is very important for any country to control its Cash transaction. In this line to Control Cash transactions Government of India taken many majors by inserting different clause and different section in many Acts. So I want explain one by one topic where cash transactions happen on daily basis in very brief manner & how our government try to control cash transaction in India.

Limit of Cash transactions in GST:-Now a days as GST is implemented in whole India every businessman want to know how much we use cash in our business what is limit of cash transaction in our business, but as far as from the perspective of GST Act there is no such limit on Cash transaction whether for cash sales or cash purchase, but In income tax there is limit regarding cash transaction.

Limit on Cash transactions in income tax Act:-

Limit for Cash Payments:-In businesses it is very important to incurred expenditure for working capital that is for the operation of Business and in business Capital expenditure also incurred. In income tax act Government impose restriction of Cash expenditure, No Assessee can make cash payment for revenue and capital expenditure exceeding Rs. 10000 in Single day to single person for such transactions.     

Note 🙁 In case of Payment made to Hiring, leasing of Good Carriages Limit is Rs. 35,000 instead of Rs. 10,000)

If Payment Exceeds Rs.10, 000 in case of any Expenditure then it is Disallowed it means we cannot claim this as Expenditure.

Limit of Cash Receipts: – As per section 269ST No person shall Receive More than Rs. 2 lakh in aggregate in a single day from single person OR for Single transaction OR in respect of transaction related to one event or occasion from a person.

If violation of law happens then amount of penalty u/s 271 D of Income tax Act will be equal to the amount received by such person.

Limit on Receiving Deposit in cash:-

As Per Sec 269SS any person shall not take any deposit, loan any amount from any other person exceeding 20,000, if any assessee violate the rule then the person shall be liable for penalty equal to loan amount.

Limit on repayment in Cash:-

As per sec 269T any person shall not repay any deposit ,loan , advance to any other person exceeding 20,000 in cash , if the person violate the rule then the person shall be liable for the penalty equal to loan amount.

Following points to be noted:-

The sec 269ST, 269SS & 269T is applicable on every person except the person as mentioned below:-

a) Government

b) Any Corporation established by Central and State Government

c) Any banking Company, Post office & cooperative bank

d) Where debtor and Creditor both person have only agriculture income, neither have any taxable income.

e) Any other notified institutions

f) Any Government Company

Conclusion: – Excess use of Cash is not good for our economy, so we should try our best to make our economy cashless and support government so that day by day our economy strengthen.

Author Name:-CMA Praveen Kumar Tiwari

Websites:- https://www.mycorporation.in/