New Delhi: Special Investigation Team (SIT) on black money has recommended a “total ban” on cash transactions above Rs 3 lakh and a law to declare such transactions as illegal and punishable. It has sought to restrict maximum cash holding with individuals between Rs 10 lakh to Rs 15 lakh to curb illegal wealth in the economy. “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,” said the report, adding that large amount of unaccounted wealth is stored and used in form of cash.
The SIT headed by Justice M.B. Shah (retd), submitted its fifth report to the Supreme Court on methods to curb black money in the economy. It said that if any person or industry requires holding cash over Rs 10 to Rs 15 lakh, it may obtain necessary permission from the Commissioner of Income tax of the area. SIT further said “that given the fact of unaccounted wealth being held in cash which are further confirmed by huge cash recoveries in numerous enforcement actions by law enforcement agencies from time to time, the '3 lakh limit of cash transaction can only succeed if there is a limitation on cash holding.”
The SIT further recommended that if there is cash withdrawal of more than Rs 3 lakh from any bank, “then that bank sho-uld consider it as a suspicious activity and should report it to Financial Intelligence Unit (FIU) and income tax department.” SIT suggested amending the Black Money (Undi-sclosed Foreign Income and Assets) and Imposition of Tax Act, by incorporating the provision that “undisclosed foreign income and assets would vest in the Union of India”. “Once it is held that under the law, property vests in Union of India, the person who is holding the said property outside the country shall have to prove that it was acquired legally or held after obtai-ning necessary permission from the RBI,” it said.
It also suggested that before investing any amount or purchasing any property outside the country, the person will have to inform the concerned jurisdictional income-tax commissioner. The I-T official will have to be informed even if the RBI permission is not required for investing abroad. This has been proposed as many individuals in the Panama Leaks, claimed that they had obtained the permission from RBI, but not the tax officials.
