A number of new provisions have been introduced in the Income Tax Act from time to time to put restrictions on cash transactions as well as to incentivise the non-cash transactions. Cash transactions have always played a major role in the Indian Economy and consistently were responsible for generation and accumulation of Black Money. The purpose of imposing restrictions on cash transaction is to curb the flow of black money which is adversely affecting the revenues of the Government, and will also minimize the investment in unproductive assets like Gold jewellery etc. The motive of various provisions under the Income Tax Act is to boost cashless transactions and digital payments. The various provisions can be classified into following categories.
a) Restrictions on cash transactions resulting in disallowance of expenses and deductions and also penalizing cash transactions above threshold limits.
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