In order to control the cash economy and increase TDS compliance, FM Shri Arun Jaitley has proposed in Budget 2018 to impose restriction on trusts and institutions incurring expenditure in cash above Rs. 10,000/ without TDS compliance.
Currently, the income of trusts and institutions is exempt if they utilise their income towards their objects in accordance with the relevant provisions of the Income-tax Act. However, there is no restriction on these entities for incurring expenditure in cash. In order to have audit trail of the expenses incurred by these entities, it is proposed that payments exceeding Rs. 10,000/- in cash made by such entities shall be disallowed and the same shall be subject to tax.
Further, in order to improve TDS compliance by these entities, the FM has proposed to provide that in case of non-deduction of tax, 30% of the amount shall be disallowed and the same shall be taxed.