Supreme Court Directs Enforcement of ₹2 Lakh Limit on Cash Transactions

 

The Supreme Court on Wednesday directed that the statutory ₹2 lakh limit on cash transactions should be strictly enforced, stating that if such a law exists, it must be implemented uniformly across all cases.

The court expressed concern over the lack of proper enforcement of the provisions under the Finance Act, 2017, which prohibits cash transactions of ₹2 lakh or more. The court emphasized that proper legal procedure should be followed when courts encounter cases involving large cash payments.

Key Highlights:

• The Finance Act of 2017 prohibits cash transactions of ₹2 lakh or more from April 1, 2017.
• Supreme Court bench comprising Justice J.B. Pardiwala and Justice R. Mahadevan was hearing a matter related to property ownership, where the petitioner claimed to have made a cash payment of ₹75 lakh on April 10, 2018.
• The court instructed that whenever such a case arises, courts must inform the jurisdictional income tax department so that the correct legal action can be taken.

The court clarified that the issue raises not only doubts about the transaction but also challenges the enforcement and awareness of the law. The bench highlighted the need for clarity to ensure that the restriction under Section 269ST of the Income Tax Act is not violated.

Judicial Recommendation

The bench has recommended that in cases where payments of ₹2 lakh or more are made in cash, courts must confirm violations under Section 269ST and notify the local income tax authority for appropriate action.