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  • Writer's pictureDhruv Seth

Important Income Tax amendments w.e.f 1st April, 2017

Please take note of the following very important changes in income tax Laws that come into effect from 1st April 2017.

  1. The limit of Rs 20,000/- for allowability of cash expenses has been reduced to Rs 10,000/- per day in aggregate per person. However, the cash payment limit for lorry freight etc. remains the same at Rs. 35000/-.

  2. Now even Capital expenses paid in cash beyond the said limit of Rs 10,000/- per day per person will not be taken into account for depreciation purposes.

  3. No person shall receive an amount of two lakh rupees or more, otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through bank account i.e. Not by cash (Sec. 269ST) —

(a) in aggregate from a person in a day; or (b) in respect of a single transaction; or (c) in respect of transactions relating to one event or occasion.

The penalty for violation of above is to be a sum equal to the amount of such receipt. Any type of receipt is hit by this provision business or personal, exempt or taxable. There is no exemption even for sale of Agricultural produce. Examples for above – (VIOLATION ATTRACTS PENALTY OF EQUAL AMOUNT)

  1. If “A” sells goods worth Rs. 3,00,000/- to “B” through three different bills each being less than 2 lacs – “A” can’t accepts cash more than 2 lacs in single day, because condition (a) gets violated.

  2. If “A” sells goods worth Rs. 3,00,000/- through *single bill* to “B” and receives cash of Rs. 1,50,000 /- on day 1 and another Rs. 1,50,000 /- on day 2 then also he is liable to penalty, since it pertains to single transaction.

  3. If one sells his car for Rs. 3,00,000/- (even his personal car) and receives the amount in cash more than 2 lacs, then penalty will be attracted.

  4. A Hospital or a Marriage Lawn or Hotel etc. can’t receive in cash more than Rs 2 lacs if the Bill for the event or occasion or Patient is more than 2 Lacs.

  5. One Cash memo can’t be of more than 2 Lacs

  6. One event / occasion – for example, marriage is one occasion. For example, gift in marriage is tax free. But marriage is one occasion and a person can’t receive on his / her marriage more than Rs 2 Lacs in aggregate in cash even on multiple days e.g. even say Rs. 100/- from 3000 people as it will amount to Rs. 3,00,000/-

  7. In view of the newly introduced above said penal provisions relating to cash receipts, the existing provisions (in vogue from 1.6.2016) relating to collection of TCS @ 1% on cash sales exceeding Rs.2 lakhs (Rs.5 lakhs, in the case of jewellery) are deleted. Consequently, there is no need to collect TCS on cash sales exceeding Rs.2 lakhs.

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