The Special Investigation Team (SIT) on black money appointed by the Supreme Court has recommended a ban on cash transactions above Rs 3 lakh and restricting cash holding with individuals to not more than Rs15 lakh to curb illegal wealth in the economy.
In its fifth report submitted to the Supreme Court, the SIT headed by Justice M B Shah (retd), said the cash transaction limit and the cash holding limit are interrelated and cash limits on transactions can succeed only if there is a limitation on cash holding.
"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," the report stated.
SIT recommended a total ban on cash transactions of Rs3 lakh and above and that "an Act be framed to declare such transactions as illegal and punishable under law".
The team said such cash transactions can be curbed only by statutory curbs on cash holding by individuals. This has been confirmed by the huge recoveries of unaccounted cash by enforcement agencies tracking spurious transactions from time to time.
"SIT has suggested an upper limit of Rs15 lakh on cash holding," the statement said, adding that any relaxation in the permissible cash holdings should have the prior sanction of the income tax authorities.
In case an individual or a company required holding of more cash, it may obtain necessary permission from the Commissioner of Income-Tax of the area, the panel said.
SIT had in its previous reports recommended clear identification of beneficiaries of participatory notes or P-Notes, use of shell companies to provide accommodation entries to launder black money and widespread cricket betting in the country.
SIT's suggestions, if implemented, could be a step towards making India a cashless economy and curbing black money.