Any mismatch between cash deposited and declared income would attract 90% tax & penalty: FinMin
The Govt. has decided to discontinue the legal tender character of high denomination bank notes of Rs 500 and Rs 1000. In other words, such notes will not be a legal tenders from midnight of November 8, 2016. This decision is being taken to curb financing of terrorism through the proceeds of Fake Indian Currency Notes and for eliminating Black Money.
The restriction has been placed on withdrawal and exchange of old currency notes but there is no limit on deposit of cash into bank account. However, people should refrain from depositing cash into their bank account if they are unable to explain source of such deposit. If the income is not explained they will have to pay penalty.
The income-tax department will check for mismatch of cash deposited by people with the income disclosed by them in their return of income. Any mismatch between deposited sum and declared income would attract 30% tax and 200% of tax liability as penalty, said Revenue Secretary, HasmukhAdia.
"We would be getting reports of all cash deposited during 10th November to 30th December, 2016 above threshold of Rs 2.5 lakhs in each account", Revenue Secretary, HasmukhAdhia Tweeted.
He further said that businessmen, housewives and workers need not to worry about small deposit of old currency up to Rs 1.5 lacs or Rs 2 lacs. Since it would be below the taxable limit. There will be no harassment by Income Tax department for such small deposits made.
This ban will impact the black money hoarders as now their existing bank notes will be a worthless pieces of paper.
Source: Taxmann
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