In a row to curb black money and corruption, Finance Minister Arun Jaitley said that all the cash transactions above Rs 3 lakh will be forbidden.The ban will be effective from April 1, 2017.
The decision to ban cash transactions has been made on the recommendation of the Special Investigation Team (SIT) which was set up by the Apex court last year.
The SIT, headed by former Justice M B Shah, had submitted its fifth report to the Supreme Court in July 2016, on measures to be needed to curb unaccounted money.
Earlier in its report, SIT had said, “Having considered the provisions which exist in this regard in various countries and also having considered various reports and observations of courts regarding cash transactions, the SIT felt that there is a need to put an upper limit to cash transactions.”
SIT, recommended a total ban on cash dealings of over Rs 3 lakh and that “an Act be framed to declare such transactions as illegal and punishable by law”.
Following this, the government accepted the recommendation and Finance Minister proposed the ban in Union Budget 2017-18.