New Delhi: The government on Wednesday warned that the cash deposits above Rs. 2.5 lakh threshold under the 50-day window could attract tax plus a 200 percent penalty if the cash deposited in bank accounts doesn’t match with income declared.
“We would be getting reports of all cash deposited during November 10th to December 30th, 2016, above a threshold of Rs. 2.5 lakhs in every account. The Department would do matching of this with income returns filled by depositors and suitable action may follow,” Revenue Secretary Hashmukh Adhia said.
“Penalty of 200 percent of the tax payable would be levied if the cash deposited in bank accounts don’t match with income declared,” he added.
Any mismatch with income declared by the account holder will be treated as a case of tax evasion.
The Revenue Secretary further stated that small businessmen, workers need not worry about small amount of deposits up to Rs.1.5 or two lakh since it would be below taxable income.
He also said that persons buying jewellery have to provide the PAN number.
“To buy jewellery one has to give his PAN no; instructions have been issued to check with all jewellers to ensure that this isn’t compromised. Action will be taken against those jewellers who fail to take PAN numbers from such buyers,” Adhia said.
Union Finance Minister Arun Jaitley earlier in the day had said that deposits of the no longer functional Rs. 500 and Rs. 1,000 currency notes in bank accounts will not enjoy immunity from tax.
After the government’s decision of withdrawing Rs. 500 and Rs. 1,000 banknotes to curb black money, corruption and counterfeit currency, Jaitley said that higher-denomination currency notes have to be deposited in bank accounts to get newer or smaller denomination currencies.
“Depositing the old currency notes in the banks will not provide any relief from taxation,” said Jaitley.
“If the money is legitimate which had been previously withdrawn from bank or earned legally and saved and had been disclosed, there is nothing to worry about,” he told DD.
The Finance Minister further said that housewives and farmers with genuine savings need not worry about depositing cash in their bank accounts.
“The small amounts that people will deposit like Rs 25,000, 30,000 or 50,000 lying in house for expenses, or whatever money could be there for meeting normal expenses should not worry,” he said.
“They can go to banks,” he added.
He further said the government’s move will promote more and more digital transactions.
“Obviously there are some inconvenience for a couple of days or couple of weeks but those inconvenience cannot be alibi that India continues to live (with black money and parallel economy),” Jaitley said.
“The decision would bring more transactions under tax net and both direct and indirect taxes would move up. Reduction in parallel economy would increase the size of formal economy,” he added.