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 Money in physical form such as banknotes and coins. More 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 Money obtained from criminal or illegal activities. For that reason, it is obviously not declared to the tax authorities. See Grey money. More and promote the use of digital A transfer of funds which discharges an obligation on the part of a payer vis-à-vis a payee. More 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.
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