Not ₹ 3 lakh! You can give just ₹2 lakh per payment

NEW DELHI: The Narendra Modi Government, which has launched an all-out effort to reduce cash transactions and increase the role of plastic, digital and other noncash modes of payment in the Indian economy, on Tuesday proposed to lower the cash transaction limit to Rs 2 lakh from the Rs 3 lakh announced in the Budget, as it introduced 40 amendments to the Finance Bill. As the Finance Bill was taken up for consideration in the Lok Sabha, the Opposition parties including the TMC, RSP and even the ruling BJP’S ally BJD protested against the introduction of these many amendments, saying it was being done as a “backdoor entry”.

Lok Sabha Speaker Sumitra Mahajan, however, overruled the objections raised by the Opposition parties, saying that the ‘incidental provisions’ involved in the amendments constitute a ‘Money Bill’ and therefore can be considered as part of the Finance Bill. The proposed amendments to the Finance Bill include a provision to cap legal cash transactions at Rs 2 lakh. While presenting the Budget on February 1, Finance Minister Arun Jaitley had proposed to make any cash transaction beyond Rs 3 lakh as illegal with effect from April this year.

A penalty of equal amount would be levied in case of any violation of the provision, Revenue Secretary Hasmukh Adhia tweeted after the amendment was moved. Another senior revenue department official said the move was intended to make the law more stringent to clamp down on cash dealings, which was giving rise to black money.

The move to cap legal cash transactions followed recommendations made by the Special Investigation Team on Black Money, which was set up by the government on directions of the Supreme Court. The amendments to the laws like Companies Act, Employees Provident Fund, Smuggling and Foreign Exchange Act, TRAI Act and Information Technology Act, have also been moved to make the functioning of tribunals more efficient by merging the smaller ones and reducing their numbers from 40 to 12.

Defending the move to make amendments, Jaitley invoked the first Lok Sabha Speaker G V Mavalankar. He said if a substantial portion of a bill deals with imposition or abolition of tax, it can be introduced as a Money Bill even even if it has other incidental provisions.

Meanwhile, Economic Affairs Secretary Shaktikanta Das said on Tuesday that the focus of the Government is to print and supply Rs 500 and lower denomination notes to avoid accumulation of high value currency. “The approach which is now being followed is greater focus on manufacturing and supply of Rs 500 and other lower denomination notes so that you have more Rs 500 notes... the apprehension is being expressed that Rs 2,000 notes would again lead to accumulation, (but) that should not happen,” he said. Explaining the reason for coming out with Rs 2,000 notes soon after demonetisation, Das said that this was primarily to ensure faster remonetisation. PM Narendra Modi on November 8 announced the scrapping of Rs 500 and Rs 1,000 notes.