Stay tuned with CashEssentials news ! - beyond payments
By subscribing, you accept our Privacy Policy.

India might reduce the penalty on cash transactions

Categories : Cash is efficient
March 13, 2017
Tags : Cash circulation policies, India, Regulation, Transaction
The government of India decided to impose a ban on cash transactions exceeding 3 lakh. However, the specified penalty is subject of debate and might be revise downwards.
Communication Team / Equipo de Comunicación

The 2017-2018 Union Budget was presented by Finance Minister Arun Jaitley on February 1st. Among the new measures, the government decided to impose a ban on cash transactions exceeding Rs 3 lakh ($4,535) in line with the recommendations of the Special Investigative Team (SIT). The purpose of this new limitation is to curb black money and promote the use of digital payment alternatives.

The modalities still need to be defined, but the new budget proposed a 100% penalty for the receiver of the cash payment, meaning that the receiver of a 5 lakh payment will have to pay that same amount as a fine. This last point has been hotly debated and the government is thus currently examining another proposal aiming to lower the penalty charged while concerning both parties of the transaction. In this scenario, the issuer and the receiver would be only fined in excess of the government-imposed limit resulting in 2 lakh each for a 5 lakh payment.

According to Riaz Thingna, Director at Grant Thornton Advisory, the government could agree to exempt cash payments usually made to labour contractors in remote areas or on construction sites.

To read the original article, please click here.