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Depositing Cash? Things to know before Depositing!
While the government's effort to create an India that is corruption free and where fruits of development reaches every citizen is in news, it's been three days since PM Modi has discontinued Rs. 500 and Rs. 1000 as legal tenders, but the discussions are never-ending with new questions popping out every minute, the most important being What to do now?
The whole chaos of unaccounted cash has left people traumatised thinking of notices and scrutiny which will be served on them. Well, unaccounted cash is something you definitely need to take care of and be worried. But, if you have the evidence and a proper explanation of the amount, you don't need to worry about any kind of notices served on you from the Income Tax Department. In fact, even the government recognises the little amount of savings held by you in cash.
What Government says in relation to savings of housewives / salaried persons / workers?
The revenue secretary Mr. Hashmukh Adia said that people such as small businessmen, housewives, and workers who have some cash lying as their savings at home or workplace should not be worried. Further, small deposits amounting to Rs. 2 lakh 2.5 lakh can be easily made as these will not fall under the taxable income and the Income Tax Department will not call such cases for scrutiny. The same was asserted by the Finance Minister, Arun Jaitley himself.
What will happen if I deposit the huge amount in my bank account?
The income tax department will match the income deposited by you in the banks with the income tax returns filed and any mismatch found would attract provisions of penalty and prosecution, as in the case of tax evasion.
There is no limit on depositing the cash in the bank accounts
Yes, we all have heard that. But, only a few of you may know that in case your KYC compliance is not completed or you don't have a PAN, you may not be allowed to deposit any amount exceeding Rs. 50000/-.
What about the cash in hand with persons carrying out business or profession?
For businessmen and professionals, it is really important to match their cash flows from business operations with cash in hand on 8th Novermber, 2016 before depositing the same with the banks. We suggest you to maintain proper books of accounts and account for source of all the cash you are depositing.
What if Income Tax Department is not satisfied?
It's really beneficial and helpful, if you are able to explain the source of income to the Income Tax Department, while depositing cash more than Rs. 2.5 lakhs. In case, this doesn't happen, you may be liable for the following:
- Scrutiny and detailed Inquiry;
- Notices u/s 142(1) or 143(2) or 144 or 148;
- The unaccounted income will be deemed as current year's income u/s 69/69A;
- The unaccounted income will be taxed @ 30% along with the applicable cess surcharge;
- Penalty u/s 270A shall be attracted which may be 50 % or 200 % depending upon under-reporting of income or mis-reporting of income;
- Prosecution u/s 276C i.e. imprisonment and fine.
Editor's Note: Is there a way out?
A possible view can be taken that any unaccounted cash may be deposited into bank and appropriate tax (30.9% plus surcharge) to be paid on this additional income. Such deposits with whole amount of tax already paid shall not attract any penalty u/s 270A for under reporting or misreporting of income, the reason being penalty for tax evasion can only be levied on difference between assessed income and returned income. However, it is advisable to take an expert opinion before taking any action.
Thus, if you have a considerable amount of earned or explained money lying with you which is accounted for properly, you have no reasons to panic with the chaos created around you! But, beware of the irregular transaction involving huge amounts i.e. Rs. 10 lakhs or more, as the Income Tax Department is watching you!
Visit our helpline https://tax2win.in/faq/notes-discountinued-faqs-helpline for any doubts and call us at +919116684439 or drop us a mail at [email protected] for free consultancy from our Tax-experts!