In a move to check illegal wealth, the Special Investigation Team on black money (SIT) has suggested a ban on cash transactions above Rs3 lakh and a cap on cash holding with an upper limit of Rs15 lakh.
Submitting its fifth report to the Supreme Court, the SIT headed by Justice MB Shah (Retd) said, “In case any person or industry require to hold more than Rs15 lakh in cash they may obtain permission from the Commissioner of Income Tax.”
The SIT also suggested that there should be a provision under the Income Tax Act that any transaction above Rs3 lakh shall be “invalid and illegal and would be a punishable offence, if amount is not paid by account payee cheque or account payee bank draft or use of electronic clearing system through a bank account.”
Also, cash withdrawal of more than Rs3 lakh from any bank account in a day should be considered as a suspicious activity and the concerned bank should report it to Financial Intelligence Unit (FIU) & the Income Tax Department.
“In addition, starting from next year, all banks, including co-operative banks, be directed to notify any income or withdrawals of more than Rs3 lakh to the Directorate General of Income Tax (Investigation) Authorities of the State and to the FIU,” it suggested.
The SIT said limitation on cash transaction can succeed only if there is limitation for cash holding, hence the maximum limit may be fixed between Rs10 and Rs15 lakh.
It also recommended amending the Undisclosed Foreign Income and Assets and Imposition of Tax Act, 2015, by incorporating the provision that ‘undisclosed foreign income and assets would vest in the Union of India so that the person who is holding the said property shall have to prove that it was acquired legally and/or held after obtaining necessary permission from the RBI.
Citing the Panama Papers investigation, the panel said unless there is a deterrent, it would be difficult to get back money stashed outside the country.
Stating that in some of the Panama cases it was contended by the assessees that they had obtained the RBI’s permission before depositing the amount abroad, the SIT said such information is not given by the assessees to the Income Tax authority.
“Hence, it is suggested that before investing any amount or purchasing any property outside the country, the assessee must inform the Commissioner of Income Tax Department of the State even if the permission of the RBI is not required,” it said.
Meanwhile, the Government also allowed payment of tax and penalty in installments over an extended period for black money disclosed under the one-time compliance scheme.
Now taxpayers can do it so in three easy installments, 25 per cent by 30 November, 25 per cent by 31 March 2017 and the balance amount by 30 September 2017. The 45 per cent penalty black money holders need to pay includes tax, surcharge and penalty.