Finance Bill amendment: Govt slashes cash transactions limit from Rs. 3 lakh to Rs. 2 lakh

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Government on Tuesday moved amendments to the Finance Bill 2017 proposing to cap cash transactions at Rs 2 lakh instead of Rs 3 lakh as provided in the Budget.

Finance Minister Arun Jaitley had proposed that the legal limit for cash transactions would be Rs 3 lakh on February 1, in line with the recommendations of the Supreme Court-constituted Special Investigation Team (SIT) on black money.

In an unprecedented move, the government has introduced as many as 40 amendments to the Finance Bill.

As the Finance Bill was taken up for consideration in the Lok Sabha, opposition parties like TMC, BJD and RSP protested against the introduction of the amendments to 40 Acts, saying it was being done in the form of "back-door entry".

The amendments to the laws like Companies Act, Employees Provident Fund, Smuggling and Foreign Exchange Act, TRAI Act and Information Technology Act, have been moved with an aim of making the functioning of tribunals more efficient by merging the smaller ones and reducing their numbers from 40 to 12.

In a tweet, Revenue Secretary Hasmukh Adhia said that the government has moved amendments to the finance bill to further reduce this limit to Rs 2 lakh. "The penalty for a violation will be a fine equivalent to the value of the transaction, he added."

The objections by the opposition parties were overruled by Speaker Sumitra Mahajan who ruled that the 'incidental provisions' involved in the amendments constitute a 'Money Bill' and therefore can be considered as part of the Finance Bill.

Among the amendments made to the Finance Bill was a provision to cap cash transaction at Rs 2 lakh. Earlier, while presenting the Budget on February 1, Finance Minister Arun Jaitley had proposed the cap to be Rs 3 lakh with effect from April 1.

A penalty of equal amount would be levied in case of violation of the provision, according to a tweet by Revenue Secretary Hasmukh Adhia after the amendment was moved.

Jaitley, while defending the move to make amendments, invoked first Lok Sabha Speaker G V Mavalankar.

He said if a substantial portion of a bill deals with imposition or abolition of tax, then even if it has other incidental provisions, it still can be introduced as a Money Bill.

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