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Know About Restrictions On Cash Transactions
For any country to develop and progress, funds are required by the ruling Government. These funds can be collected by the Government through various ways and one such way is through imposing taxes on income earned above a specified threshold limit of cash transactions. By doing so, the Government is not only able to collect the taxes but also stops tax evasions.
Furthermore, in order to evade income tax, various persons make their transactions through cash and do not report them while filing their returns. In order to curb these practices, the government has put a limit on transactions under the Income Tax Act. Not only this, the government also imposes penalty over and above a predefined threshold limit.
Section | Particulars | Cash Limit | Disadvantages, If Cash Limit is Exceeded |
Section 13A | Donations received by political parties | Rs 2000 | Exemption shall not be allowed |
Section 35AD | Capital expenditure on specified business | Rs 10,000 | No deduction allowed |
Section 36 Section 80D | Insurance Premium & Health Insurance Premium | Rs 0 | No deduction allowed |
Section 40A(3) | Payment for any expenditure | Rs 10,000 | Disallowance of expenditure |
Section 43(1) | Payment for capital expenses in cash | Rs 10,000 | Shall be ignored for actual cost of asset calculation |
Section 80GGB Section 80GGC | Contribution to political parties | Rs 0 | No deduction allowed |
Section 80G | Contribution to charitable institutions | Rs 2,000 | No deduction allowed |
Section 269SS 269T | Acceptance/Repayment of loan in cash | Rs 20,000 | 100% penalty |
Section 194N | TDS on cash withdrawals from banks/post offices | Rs 1 crore | Depends on filing of ITR for 3 previous years |
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