Even today, cash is accepted in many places in India. Especially in real estate, business deals and social work, cash is used a lot. But if you cross some limits in cash transactions, you may have to lose everything.

Financial advisors and tax experts have warned via social media that large cash transactions can lead to harsh penalties under Indian tax laws. A recently viral post shows how easy it is to break the rules and the consequences can be brutal.

100% penalty can be levied

In a post on X (formerly Twitter), CA Nitin Kaushik wrote, ‘If you accept more than ₹ 2 lakh in cash, you can lose everything! Do you think you can get away with it by making payments through different modes? Then think again! Under Section 269ST of the Income Tax Act, accepting ₹ 2 lakh or more in cash, even if in installments, can attract a penalty of 100 percent. This means that you can lose everything you have received.’

CA explained how the rule works? 

• One day limit: Receiving more than ₹2 lakh cash in a day will be considered a violation of the rules. Example: ₹1.5 lakh received in the morning and ₹1 lakh in the evening? If the total is ₹2.5 lakh, then the fine will be only ₹2.5 lakh. 
• Splitting the payment on a daily basis? This doesn’t help. Example: Selling a plot for ₹3 lakh and taking ₹1 lakh daily for three days, this too will be considered illegal. 
• Wedding and event expenses are counted as one transaction. Example: ₹1.5 lakh for catering + ₹1 lakh for decoration = ₹2.5 lakh penalty will be imposed. 

Citing a real case, he said, “A seller received ₹5 lakh every month for six months for a property deal. Each payment was less than ₹2 lakh but the total was ₹30 lakh. The final penalty was ₹30 lakh.”

How to avoid paying a fine?

Never accept a cash transaction of more than Rs 2 lakh. No matter how you distribute it. Avoid large cash transactions in business, property or events. Transactions should be accepted only through bank transfer, UPI or digital payment. Many people unknowingly break this rule and then have to pay a heavy price. 

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In this era of mobile revolution, you pay online for small to big purchases. There was news about UPI payment that it is going to be expensive. Transactions above Rs 2,000 will attract a charge of 1.1 per cent. UPI payment means if you pay more than 2 thousand rupees through digital medium like Google Pay, Phone Pay and Paytm, then you may have to loose a little more pocket, but in this a little There are screws. If you make bank account linked payment then nothing has changed for you.

When will the UPI payment be charged?

The National Payments Corporation of India (NPCI) in its circular suggested that you will be charged 1.1% for payments above Rs 2000. It has been suggested that merchant transactions through UPI may attract Prepaid Payment Instruments (PPI) fees. According to the NPCI circular, you may have to pay 1.1% charge on UPI transactions above Rs 2000. After the arrival of this news, many questions started arising in the minds of the people. The question is, will UPI become expensive for the user after this decision?

Is this charge going to be imposed on all types of online payments or is it going to affect any particular segment?

NPCI has clearly stated in its circular that this change will not affect the customers. Customers will not have to pay any extra charge. There will be no charges for UPI transactions linked to bank accounts. They are absolutely free as before. There will be charges on PPI wallet only, which will have to be paid by the merchant. There is no charge on this for the customers.

Will UPI payment become expensive?

According to the circular issued by NPCI, this charge will be levied on merchant UPI transactions. That is, this charge will not apply to peer to peer (P2P) and peer to merchant (P2M) transactions between banks and prepaid wallets. That means you don’t need to take tension. You can use UPI without any hassle and worry. You will not have to pay any additional fee. Simply put, UPI payment is absolutely free. Nothing has changed for you. Nothing has changed in UPI Bank Transfer.

Who will have to pay the charge?

The new offer is only for Wallets/PPIs. That is, if you do a transaction of more than 2 thousand from the wallet, then you may be charged an interchange fee, but this charge will be taken by the merchant. That is, if you make UPI payment through prepaid payment instrument (PPI) such as wallet, credit card, then you will have to pay interchange fee. This charge will be 1.1% of the total payment made by you to the merchant.

This too when this transaction will be more than 2000 rupees. This is exactly the same as in the case of debit cards and credit cards. Bank to bank transactions are still completely free.
This charge will have to be given to the merchant. Here merchant means in simple language, understand the shopkeeper, whom you are paying through UPI.

Will it affect the general public?

There will be no impact on the common man’s pocket if the interchange charge is levied. The interchange charge is paid by the merchant to the wallet or card issuer. In such a situation, it will not affect the merchant paying less than Rs.2000. According to this circular, if you add money from your bank to your prepaid payment instrument like wallet like Paytm, PhonePe, then a company like Paytm, PhonePe will have to pay 15 basis points for loading the transaction to the remitter bank.

What option to choose?

NPCI has said in its circular that no charges will be levied on peer-to-peer and peer-to-peer-merchant transactions between bank accounts and prepaid payment instruments (PPIs). In the circular, it has been said not to implement this on P2P, P2M transactions. If you pay to a person or a shopkeeper and choose the bank account as the payment option, then you will have to pay some charges. That is, it is better to choose the bank account option while making UPI payment to avoid any kind of charge.

If still there is confusion then understand this

Interchange charges are paid by payment service providers to wallet issuers such as banks. These wallets are exclusively online payment enablers like Paytm, PhonePe, GooglePay, etc. If you understand the news here in one line, then it will not affect you. You will not have to pay any charge on the transaction from the wallet as well. This is entirely a matter between the bank and the merchant.

If you pay through UPI, then you will not be charged anything. Even if you do it through wallet, there will be no charge. This charge is a matter between the shopkeeper for whose scanner you have paid and his bank. It will become expensive for the shopkeeper (merchant) from April 1. When the money goes to the shopkeeper’s bank account through UPI QR, he will have to pay an interchange charge of 1.1% on that amount.

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Let us tell you that even before the state employees’ organizations demanded bonus, the Ashok Gehlot-led government of Rajasthan announced bonus to its employees.

In Rajasthan, the government of Chief Minister Ashok Gehlot has announced to give bonus to government employees on the festival of Diwali. This decision of the Chief Minister will benefit 6 lakh employees of Rajasthan. This amount of bonus will be given to all those state employees except senior officers who are working in the pay-matrix level-12 or grade pay-4800 or below level pay scale of Rajasthan Civil Services Rules, 2017. It is being said that on this occasion of the festival, the state government has provided a big relief to its employees by announcing bonus.

Bonus will get this amount

The bonus of Diwali will also be given to Panchayat Samiti, Zilla Parishad employees and work-in-charge employees. The ad-hoc bonus has been announced for 2021-22 on the basis of maximum emoluments of Rs 7,000 and a month of 31 days. This bonus will be payable for a period of thirty days. In this way all the eligible employees of the state government will get a one-time ad-hoc bonus of Rs.6774. The decision will put a burden of about 406 crores on the exchequer.

pre-demand announcement

According to the notification, 75 percent of the bonus amount will be paid in cash and the remaining 25 percent will be deposited in the general provisional fund account. Let us tell you that even before the state employees organization demanded bonus from the state government, Gehlot-led Rajasthan government announced bonus to its employees.

comparison with previous years

The Gehlot government had given bonus to about 6 lakh employees on Diwali last year as well. During that time, the employees got a bonus of up to Rs 6774. Earlier, on Diwali of 2021, 50 percent of the bonus money was deposited in cash and 50 percent money was deposited in the GPF account of the employees. But this time i.e. before Diwali 2022, 75% of the bonus amount will be directly credited to the salary account and the remaining 25% will be deposited in GPF.

Gehlot’s decision after Center

It is worth noting that just a few days ago, the central government had announced bonus to central employees on Diwali. The Finance Ministry had decided to give non-productivity linked bonus (ad hoc bonus) to central government employees. In which money will be given to the employees on the basis of 30 days salary.

Railways gave 78 days bonus

Indian Railways had approved a Productivity Linked Bonus equal to 78 days’ salary to all its eligible non-gazetted railway employees. RPF/RPSF employees were not included in this.

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