Income tax provisions for cash transactions
- 40(A)(3)- 10K exp. limit (If any person makes any payment in cash exceeding 10 thousand in a day to any other person, then he will not get the exemption of that expenditure.
- 44AB- 95% audit criteria (Taxpayers who are required to get their accounts tax audited by a CA under section 44AB)
- 44AD- Profit 8%, not 6% ( There is a taxation scheme where individuals like business owners and small scale enterprises are not required to do tax audit of their account books for filing tax)
- 80D- Not allowed (A person can claim a deduction of up to Rs 25,000 for insurance of self, spouse and dependent children. Rs 25,000 for insurance of parents if they are below 60 years of age Rs 50,000 if your parents are above 60 years of age
- 80G- 2K limit (Tax exemption can be taken on donations made by the government to relief funds and organizations working for public welfare, if you have donated in cash, then only 2000 rupees more can’t donate
- 80GGB/GGC Not allowed (Contribution to political party or electoral trust)
- 80JJAA- Not allowed (paid or payable to any employee at the time of termination of his service or retirement or voluntary retirement, such as gratuity, severance pay, encashment of leave, voluntary retirement benefits, reimbursement of pension and the like)
- 194N- TDS on withdrawal (A person withdraws cash in excess of Rs 20 lakh in aggregate during a financial year if the person has filed any or all three previous Income Tax Returns (ITR) in cash exceeding Rs 1 crore) TDS will be deducted at the rate of 2% on cash withdrawal if ITR is not filed. 2% on cash withdrawal above Rs 20 lakh and 5% TDS will be deducted on withdrawal above Rs 1 crore)
- 269SS/T – Loan 20K limit 2 lakh or more in cash may be fined)