Proposed Changes in Finance Bill, 2017
1) Threshold limit prohibiting cash payments reduced
In order to reduce generation and circulation of domestic black money the Finance Bill, 2017 had imposed a prohibition on receipt of cash payments of rupees three lakhs and above under new section 269ST. Any contravention of the aforesaid provision would invite penalty on the recipient under Section 271DA which shall be equivalent to the amount of cash received. However, there would be no penalty if there is good and sufficient reasons for contravention of such provision.
The Finance Bill, 2017 originally presented on February 1, 2017 has proposed to amend the threshold limit of cash payments from rupees three lakhs to two lakhs.
Refer extract of section 269ST:
‘269ST. No person shall receive an amount of three lakh rupees or more—
(a) in aggregate from a person in a day; or
(b) in respect of a single transaction; or
(c) in respect of transactions relating to one event or occasion from a person,
otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account:
Provided that the provisions of this section shall not apply to—
(i) any receipt by—
(b) any banking company, post office savings bank or co-operative bank;
(ii) transactions of the nature referred to in section 269SS;
(iii) such other persons or class of persons or receipts, which the Central Government may, by notification in the Official Gazette, specify.
Explanation.—For the purposes of this section,—
(a) “banking company” shall have the same meaning as assigned to it in clause (i) of theExplanation to section 269SS;
(b) “co-operative bank” shall have the same meaning as assigned to it in clause (ii) of theExplanation to section 269SS.’.
2) TCS on cash transactions scrapped
The existing provision to collect 1% TCS on cash sale of jewellery above five lakh rupees has been proposed to be omitted. After omission of such provision the TCS liability would attract on any cash transaction for goods or services above rupees two lakhs.
Now the TCS provision on cash payments has been proposed to be omitted. So, any cash receipt of rupees two lakhs or above would only invite penalty on seller as per provisions of Section 269ST. In that case there would be no liability to collect TCS from buyer on such payment.
3) Mandatory quoting of Aadhaar Number
The Finance Bill, 2017 as passed by Lok Sabha introduced a new section 139AA which provides that every person who is eligible to obtain Aadhaar Number is required to quote Aadhaar Number in :-
a) PAN application form;
b) Return of income.
Person can quote the Enrollment ID of Aadhaar application form in case he does not possess the Aadhaar Number.
Every person who has been allotted PAN shall intimate his Aadhaar Number to the authority which will be notified by the Central Govt. In case of failure to intimate the Aadhaar Number to such authority, PAN allotted shall be deemed to be invalid and it shall also be deemed that the person had not applied for allotment of PAN.
It is a welcome move by the Government. It will put curbs on instances of issuing multiple PAN to a single individual. Further, quoting of Aadhaar number would restrict granting of subsidies to only those individuals who are eligible to claim it.
4) Cap on political donations removed
As per the existing provisions of the Companies Act, 2013, companies can donate only up to 7.5% of their average profits to political parties. Now such limit has been proposed to be removed. So, companies will now have liberty to donate huge sums to political parties.
A new provision has also been proposed which mandates donation to political parties via account- payee cheques or bank draft or through electronic mode. Further, a provision has been made for funding of political donations through any notified instrument. Now Govt. would get powers to notify electoral bonds for funding of political parties.