Confusion abounds on if and how much cash deposits can you make into your bank accounts following the government's decision to scrap old Rs 500 and Rs 1000 notes as valid tender.
Will all your deposits attract the Income Tax department's scrutiny? Will there be penalties and if so, of what kind?
Following are some of the common questions and the answers provided by Revenue Secretary Hasmukh Adhia late on Wednesday.
Q1. A lot of small businessmen, housewives, artisans, workers may have some cash lying at home as savings. Will the income tax department ask questions if it is deposited in banks?
A. Such groups of people need not worry about small deposits of upto Rs. 1.5 or 2 lakhs, since it would be below the taxable income. There will be no harassment by income tax department for such amounts.
Q2. Will the IT Department be getting reports of cash deposits made during this period? If so, will the current threshold of reporting requirement of reporting cash deposites of more than 10 lakhs will only continue?
A. The IT department will be getting reports of all cash deposits over Rs 2.5 lakh between November 10 to December 30 2016. The department will match this with the income returns filed. Suitable action may follow.
Q3. Suppose the department finds that a huge amount of cash above 10 lacs is deposited in a bank account, which is not matching with the income declared, what would be the tax and penalty to be paid on the same?
A. This would be treated as a case of tax evasion and the tax amount plus a penalty of 200% of the tax payable would be levied as per the section 270(A) of the income tax Act
Q4. It is believed that a lot of people are buying jewellery now, how does department plan to tackle this?
A. People buying jewellery will have to provide their PAN number. The Finance Ministry is issuing instructions to field authorities to enforce this requirement with all jewellers. Action will be taken against jewellers who fail to take PAN numbers from such buyers. The cash deposits of jewellers will be scrutinised against the sales made; whether they have taken the PAN number of the buyer will also be checked.
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