Anil Harish, partner, DM Harish & Co, said, "That is, if you buy jewellery and think you can stagger the payment. That is not allowed. The limit is on a single transaction and single occasion. It is a move to get transactions digital."
The devil is in the fine print in every Budget, and it's no different this year too.
Be careful about high-value cash transaction. The 100% penalty on the receiver for the cash transactions of above Rs 3 lakh is applicable even if the payment is done on different days for the same transaction.
Anil Harish, partner, DM Harish & Co, said, "That is, if you buy jewellery and think you can stagger the payment. That is not allowed. The limit is on a single transaction and single occasion. It is a move to get transactions digital."
However multiple transactions is allowed if the total cash payout is less than Rs 3 lakh.
"The Budget also has some retrospective taxes as well," Harish said. At present, the Section10 (38) of the Income-tax Act used to allow the capital gains from the sale of equity shares lists on any stock exchange in India and held for more than a year provided the security transaction tax (STT) is paid. To avoid gross misuse, the Budget has put in an additional condition that for shares acquired after October 1, 2004, the long-term capital gains will be exempt only if the STT has been paid on these on purchases and sales.
"Take the instance of Ratnakar Bank that got listed this year. The promoters holding shares in the unlisted entity will have to pay capital gain tax when the entity gets listed, according to the fine print," said Harish.
The finance minister has also expanded the ambit of the Section 56 of the Income-tax Act to companies and firms so that they do not under declare the price of property and shares they purchase.
The amendment to the section says that if companies or firms receives any assets like equity shares at lower than the fair market value or a property at a price lower than the ready reckoner rates then the shortfall will be deemed to be income in the hands of the purchaser or the company in this case and will be taxed according to the Section 56 of the I-T Act.
Ashok Shah, partner at M A Shah Associates, said, "This will have far-reaching implications on companies whose shareholdings were reorganised. It is not well thought of section. However, the tax on the cash transactions is good as it will promote digital payments. But need to see the notifications of all these sections."
Another provision that comes into effect retrospectively is service tax for construction of immovable property. In June 2016, Delhi High Court had allowed for the lifting of service tax on the construction of property. The Budget says the provision of Section 2(A) pertaining to the levy of service tax cannot be revoked by any court of law for all cases right from 2010.
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