Government may prohibit cash deals above Rs 3 lakh: CBDT

The government is taking into consideration the suggestions of Special Investigation Team (SIT) on black money to prohibit cash transactions above Rs 3 lakh, put 1% Tax Collected at source (TCS) on this transactions and also made PAN quoting mandatory.

Central Board of Direct Taxes (CBDT), chairperson, Ms Rani Singh Nair said that the government is holding discussions for the renegotiated India-Singapore tax treaty. Thus now they have re-negotiated Mauritius, Singapore is under discussion and hope that they will have a discussion with them as this is a bilateral treaty. After the concerns of both the countries the treaty will be signed.

SIT stated that there is a need to put an upper limit to cash transactions. It recommended a total ban on cash transactions of Rs 3 lakh and above, an Act be framed to declare such transactions as illegal and punishable under law. SIT had also suggested an upper limit of Rs 15 lakh on cash holding. In case any person or industry requires holding more cash, it may obtain necessary permission from the Commissioner of Income Tax of the area.

CBDT had earlier clarified that no tax would be collected at source when cash component of the payment for goods and services is less than Rs 2 lakh even if the total consideration is more than this amount. The SIT, headed by Justice M B Shah (retired), last month submitted its fifth report to the Supreme Court on steps needed to curb black money.