Daily cash transactions limit not for withdrawals from banks and post offices

The income tax department has clarified that the government-imposed ban on cash transactions worth more than Rs 2 lakh will not be applicable to withdrawals from banks as well as post office savings accounts.

The restriction is also not applicable to any receipt by government or co-operative banks.

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The rule says that no individual can deal in cash in excess of Rs 2 lakh on a single day, either for a single transaction or for transactions relating to one event or occasion.

"It has also been decided that the restriction on cash transaction shall not apply to withdrawal of cash from a bank, co-operative bank or a post office savings bank," a CBDT statement said in this regard.

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A necessary notification in this regard would also be issued soon.

While presenting the budget for FY 2017-18, Finance Minister Arun Jaitley had proposed that cash transaction of over Rs 3 lakh be banned. However, the ban was instead imposed on transactions worth more than Rs 2 lakh as an amendment to the Finance Bill.

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"Further, it has also mandated that any donation in cash exceeding Rs 2,000 to a charitable institution shall not be allowed as a deduction under the Income-tax Act," the statement added.

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