MUMBAI: Recently, the income tax department relaxed the treasury standards for covid-19 processing. He issued a notification allowing patients, family and friends to pay â¹2 lakh or more in cash at hospitals between April 1 and May 30. The hospital should take a copy of the Aadhaar and PAN details of the patient and the person giving the money. They must declare their relationship.
There is a general ban on cash payment transactions above â¹2 lakh. For example, if you buy a jewelry set from â¹3 lakh, since the purchase price is more than the allowable limit, the person cannot pay cash for this transaction.
A person cannot even accept cash from a close relative above this limit in one day. Some transactions do not fall under this jurisdiction. For example, you run a business and want to make a deposit to â¹2 lakh in the bank account which you received in several transactions during your business.
LIMITS ON LOANS AND GOODS
If someone takes a loan from a financial institution or even a friend, the cash limit cannot be more than â¹20,000. The same rule applies to loan repayment. For the repayment of the loan of â¹20,000, the person must pay through the banking channel.
The maximum money allowed in a real estate transaction is also â¹20,000. Even if a seller takes an advance, the limit is the same.
Businesses are also discouraged from accepting or paying in cash. If a business owner makes more than â¹10,000 in cash, he cannot claim it as an expense or request a depreciation.
TAX SAVINGS INSTRUMENTS
When planning your tax, make sure you don’t pay for your health insurance in cash. The law does not allow the taxpayer to benefit from section 80D if he pays the insurance premium in cash. This must be done through the banking channel.
In most cases, the onus is on the recipient not to accept cash. Typically, the income tax service levies the penalty on the escrow, equivalent to the amount involved. This makes sense because the person giving the money can always deny it.
This is not allowed even if you receive the money in cash and immediately deposit it into the bank account.
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