While a regular business is required to maintain books of account, the small taxpayers under the presumptive taxation scheme are exempt from the same, and are taxed on a declared income at a prescribed rate.

Among several changes made in the Finance Bill, 2017 to discourage cash transactions, the government has cut the presumptive taxation rate to 6% from 8% for the amount of turnover realised through cheque and digital mode, the Central Board of Direct Taxes (CBDT) said in a statement. Additionally, the Finance Bill prohibits businesses from claiming depreciation allowance or investment-linked deduction if the capital expenditure in cash exceeds `10,000, while halving the limit for revenue expenditure in cash to `10,000.

The legislative provisions are directed at small taxpayers including those that avail presumptive taxation scheme. While a regular business is required to maintain books of account, the small taxpayers under the presumptive taxation scheme are exempt from the same, and are taxed on a declared income at a prescribed rate.

Further, CBDT reiterated that a person cannot receive more than `2 lakh in cash and a contravention will attract penalty of a sum equal to the amount of such receipt. However, it clarified that the restriction was not applicable to any receipt by government, banking company, post office savings bank or co-operative bank. The restrictions will also not apply to withdrawal of cash from a bank, cooperative bank or a post office savings bank. The CBDT will issue necessary notification for the same.

“Restriction on receipt of cash donation up to `2,000 has been provided on political parties for availing exemption from Income-tax. Further, it has also mandated that any donation in cash exceeding `2,000 to a charitable institution shall not be allowed as a deduction under the Income-tax Act,” CBDT said in a statement.