Rules for Compliance or Violation?

As part of its various measures to curb the generation and flow of black money in the country, the Government of India had imposed certain ceilings for amounts received / paid  by cash by introducing  new sections in the Income Tax Act, 1961, with effect from 01-04-2017. Consequently, the maximum amount that can be received by a person in cash has been capped at Rs.2 lakhs in following situations:-(1) In aggregate from a person in a day; or (2) In respect of a single transaction; or (3) In respect of transactions relating to one event or occasion from a person. In such situations, the amount can be received only through normal banking channels like cheque, DD, transfer by way of NEFT/RTGS etc. On violation of this section, a penalty equal to the amount received would be imposed on the recipient (not payer). (Government, banks and post offices are exempt from the above rule.) Further, payment of any  revenue expenditure above Rs.10,000/- and incurring of any capital expenditure exceeding Rs.10,000/- by cash have been strictly prohibited. Receipt / payment in all these all cases shall be only through normal banking channels.

It is common knowledge that the above new provisions relating to receipt / payment of amounts in cash are being blatantly violated by many quarters, least mindful of the illegality / seriousness / criminal nature of the transaction and the attached penal provisions. The violations in this regard mostly centre around educational institutions, where huge amounts of money are accepted by cash, in the guise of donation etc., in some cases even without a receipt. Huge amounts in cash are also changing hands on the occasion of recruitments to private schools and colleges, in property transactions etc. Such unlawful / illegal financial transactions are happening in an alarming proportion ever since promulgation of the new rules.

One wonders why the authorities are turning a blind eye to these unlawful / illegal financial transactions, which are generating whopping amounts of black money in total disregard to the Government’s priorities and whether certain rules are meant not for compliance. The sincerity shown in any legal enactment should be shown in its strict enforcement as well. It is hoped that this aspect will receive due attention by the authorities concerned.