New Delhi: The forthcoming Union Budget is likely to announce measures to promote cashless economy in the country to maintain surge in digital transactions post-demonetisation.
Sources said that on the anvil may be steps to bring down limit for imposing tax collected at source (TCS), quoting PAN, and putting an upper limit on holding of cash by individuals.
Currently, one per cent tax collected at source (TCS) is imposed for using cash to buy goods and services over Rs 2 lakh. According to sources, the government is likely to bring down this limit so as to discourage cash transactions. “If the limit for imposing TCS is brought significantly to around Rs 1 lakh or even below, it will discourage people to use cash for large transactions,” said sources.
The government may also bring down the limit for providing PAN for cash transactions in the Union Budget and more items may be brought where quoting of PAN will be mandatory of the transaction is done through cash.
Currently, a cash payment of over Rs 50,000 in connection with foreign travel (including fare, payment to travel agent and purchase of forex) requires PAN.
PAN is mandatory for cash payments of more than Rs 50,000 for cash cards or prepaid instruments. PAN is also required for making a cash deposit of more than 50,000 or purchase of bank draft/pay orders/bankers cheque of the equal denomination on a single day, payment of life insurance premium of Rs 50,000 in a year.
To discourage cash holdings, the government may announce upper limit for using cash for making transactions. Special Investigation Team (SIT) on black money has recommended a “total ban” on cash transactions above Rs 3 lakh and an act be framed to declare such transactions as illegal and punishable by law. It had also asked for restricting maximum cash holding with individuals between Rs 10 lakh to Rs 15 lakh to curb illegal wealth in the economy.
