Cashless Transactions - Evolution, Advantages, Impact and Measures by the Government

CA.R.S.KALRA | Last updated: 27 November 2020

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Quick Summary

This article delves into the historical evolution of money, from the barter system to electronic currency. It highlights the significant advantages of cashless transactions, such as reducing theft, combating black money and corruption, and increasing tax revenue for the government. The piece also discusses government initiatives, like Section 269ST, aimed at restricting large cash payments to foster a more transparent economy.

We were told by history that before the advent of cash there was a concept of a barter system. Though the barter system, where there was no currency - no cash, and things were exchanged according to needs, the society realized that the barter system hasits own series of advantages and disadvantages,

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FAQ :

The evolution of money includes the barter system (commodity money), metallic money (coins), paper money, credit money, and finally electronic money (digital currency).

Cashless transactions reduce the need to carry cash, minimising theft risk, inconvenience, and the problem of change. They also make it easier to track black money and illegal transactions, leading to increased transparency and tax revenue for the government.

Cashless transactions ensure that every transaction is recorded and traceable, making it difficult to conceal income, evade taxes, or engage in corrupt practices. This transparency helps in eliminating fake currency and ensuring tax compliance.

The government has introduced measures such as Section 269ST of the Finance Act, 2017, which restricts cash transactions of Rs. 2 Lakhs or above. Other measures include disallowing expenses paid in cash for tax deductions and penalising cash transactions exceeding certain limits.

A cash transaction involves the immediate exchange of physical money for goods or services, rather than using banking channels or digital payment methods.