Govt proposes cap of Rs 2 lakh on cash transactions as against Rs 3 lakh proposed in Budget

New Delhi: Continuing with government steps to clamp down on black money, Finance Minister Arun Jaitley on Tuesday proposed a cap of Rs 2 lakh on cash transactions, down from Rs 3 lakh as proposed in the Budget.

Finance Minister had earlier proposed in his Budget speech to ban all cash transactions above Rs 3 lakh with effect from April 1. The move to cap legal cash transactions followed recommendations made by the Special Investigation Team on black money.

The decision to ban cash transactions beyond a threshold is based on the recommendation of the Special Investigation Team (SIT) on black money that was set up by the Supreme Court, Jaitley had said while presenting Union Budget 2017-18 in Parliament.

The SIT, headed by Justice M B Shah (retired), in July had submitted its fifth report to the Supreme Court on steps needed to curb black money.

Noting that a large amount of unaccounted wealth is stored in cash, SIT had said, “having considered the provisions which exist in this regard in various countries and also having considered various reports and observations of courts regarding cash transactions, the SIT felt 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 and that “an Act be framed to declare such transactions as illegal and punishable under law”.