Changes wef 01.04.2017 Relating to Cash Payments/Receipts & reporting as per MCA and in ITR

Changes wef 01.04.2017 Relating to Cash Payments/Receipts

Section 269ST which has been newly inserted provides that no person shall receive an amount of two lakh rupees or more-

·         In aggregate from a person in a day

·         In respect of a single transaction

·         In respect of transaction relating to one event or occasion from a person

 Otherwise, than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account.

 The section is not applicable to the following:

·         Government

·         Any banking company

·         Post office savings banks

·         Co-operative banks

·         Any other person as notified by the Central Government

Transactions of the nature referred to in Section 271 DA in the Act shall provide for levy of penalty on a person who receives a sum in contravention of the provisions of the proposed section 269ST. The sum equal to the amount of receipt shall be levied as penalty by the Joint Commissioner.

Important Points in respect of Section 269ST and Section 271D and other Cash Restrictions are as follows:

 Relating to Cash Receipts

1)      The provision restricts the receipt of cash above Rs. 2 lacs:

Any person who receives above Rs. 2 lacs in cash will be liable to penalty equivalent to the amount received however there is no restriction on payment of cash under this section.

2)      Receiving cash in a day from a person above Rs. 2 lacs is not allowed:

The cash receipt of more than Rs. 2 lacs from a single person in a day is not allowed even though the amount has been paid in multiple transactions during the day.

3)      Receipt exceeding Rs. 2 lacs for a single transaction or single event is not allowed.

Relating to Cash Payments

1)      Cash Payments above Rs. 10000/-:

The earlier provision U/S 40A(3) restricting cash payments above Rs. 20000 for business purposes has also been amended. The limit for payment of expenses by Cash for both Capital and Revenue expenditure has been reduced from Rs. 20000 to Rs. 10000 per day in aggregate per person.

2)      Now cash payments above Rs. 10,000/- shall not be allowed as expense in the income tax return.

For Capital Expenditure the depreciation shall not be allowed on Capital Asset in case of payment made in cash.

3)      Cash donations exceeding Rs.2,000 will not be eligible for education under Section 80G.

Consequently:

1.       The limit for receipt of amount in Cash has been prescribed as 2,00,000. 

2.       In case of violation of such provision equivalent penalty shall be leviable U/s 271DA of Income Tax Act.

3.        If a person accepts amount of Rs.2,00,000 or more

·         by Cash either in one transaction or

·         from one person in aggregate in a day or

·         in relation to one event or occasion from a person

he/she shall be liable for equivalent amount of penalty under Section 271DA.

4.       Since cash receipts exceeding Rs. 2 lacs have been made liable for equivalent penalty the TCS provisions requiring collection of tax @ 1% on cash sales exceeding Rs. 5 lacs in case of bullion/jewellery and Rs. 2 lacs in case of other goods/ services has been withdrawn.

1. 

Cash reporting required in Income Tax return form ITR-1 & ITR-4S introduced for Asst Year 17-18

CBDT notified the ITR forms for assessment year 2017-18 on 1^st April 2017. ITR form 1 which is for person having taxable income less than 50lacs and ITR 4S for deemed income under Section 44AD are introduced requiring declaration of cash deposited during demonetization period i.e. 09.11.16 to 31.12.16. Column Part-E of the ITR-1 form is added requiring information on cash deposits during such period if the "aggregate cash deposits" during this period were Rs 2 lakhs or more.

 

Cash Reporting as per MCA

              The Ministry of Corporate Affairs has made amendment in the Companies Act, 2013 to add provisions for Companies  to  disclose details of SBN in balance sheet held and transacted during demonetization period from 08-11-2016 to 30-12-2016.

 1) The following clause shall be inserted in Schedule III, in Division I, in Part I under the heading “General instructions for preparation of Balance Sheet” in paragraph 6:

 “Every company shall disclose the details of Specified Bank Notes (SBN) held and transacted during the period from 8th November, 2016 to 30th December, 2016 as provided in the Table below:

 

	SBNs	Other Denomination Notes	Total
Closing cash in hand as on 08.11.2016
(+) Permitted receipts
(-) Permitted payments
(-) Amount deposited in Banks
Closing cash in hand as on 30.12.2016

 For the purposes of this clause, the term ‘Specified Bank Notes’ shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated the 8th November, 2016.”.

 2) The following clause shall be inserted in the principal Act, in Schedule III, in Division II, in Part I under the heading “General instructions for preparation of Balance Sheet” in paragraph 6:

 “Every company shall disclose the details of Specified Bank Notes (SBN) held and transacted during the period 08/11/2016 to 30/12/2016 as provided in the Table below:

 

	SBNs	Other Denomination Notes	Total
Closing cash in hand as on 08.11.2016
(+) Permitted receipts
(-) Permitted payments
(-) Amount deposited in Banks
Closing cash in hand as on 30.12.2016

 For the purposes of this clause, the term ‘Specified Bank Notes’ shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated the 8th November, 2016.”.

3) MCA has also made amendments in the Companies (Audit and Auditors) Rules, 2014 to add provisions for auditors to report on company disclosure of SBN during demonetisation period from 08-11-2016 to 30-12-2016.

 In rule 11, the following clause shall be inserted:

 “Whether the company had provided requisite disclosures in its financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8th November, 2016 to 30th December, 2016 and if so, whether these are in accordance with the books of accounts maintained by the company.”