The current notification from the Central Board of Direct Taxes (CBDT) regarding the deposits above Rs 2.5 lakh cross puzzled people. Now, people are scared that they might receive notices from IT department. One thing that must be noted is, a person who pays his taxes genuinely and can account for his deposits need not worry.
The government ordered the respective banks to provide details of individuals who deposit Rs 2.5 lakh or more in savings accounts or fixed deposits between November 9 and December 30.
Despite this, those who deposit more than or equal to Rs 12.5 lakh must report to their authorities. The notification further added that the depositor must quote his permanent account number (PAN) in the case of cash deposits exceeding Rs 50,000 on a single day in between November 9 and December 30.
Amit Maheshwari, partner, Ashok Maheshwary & Associates says “Even if a notice is issued, it will ask the person to explain the source of income. The assessee will need to provide documents supporting his claim regarding the source of money”. He adds that if sufficient explanation is not provided, proceedings and penalties could follow. “Notices under different sections are just the starting point. The penalties, interest, etc. vary depending on the outcome of the proceedings,” says Divya Baweja, partner, Deloitte Haskins & Sells.
He adds that if the individual is not able to account his deposits then he will have to face the penalties.
“Notices under different sections are just the starting point. The penalties, interest, etc. vary depending on the outcome of the proceedings,” says Divya Baweja, partner, Deloitte Haskins & Sells.
Sources claim that the Parliament is about to enable a bill that will allow individuals in depositing the unaccounted cash in demonetised Rs 500 and Rs 1,000 notes urging them to pay 50% tax, lock in 25% amount for four years at zero interest,which means that only 25% of the total deposit can be put into immediate use.
Meanwhile, one has to give a rigid explanation and sources if he is not ready to pay 50% penalty and 25% locked amount.
Cross checking will be done by Tax officials on those who are depositing the lump sum money by dividing the total among their family members.
“There is a Rs 2.5 lakh exemption but if you have split (the money) and four family members have each deposited this amount, then it will need to be seen,” said a government official.
Union cabinet processed the amendments done by the income tax law, and however the statement on non-verifying the deposits below Rs 2.5 Lakh remained the same.
“We would be getting reports of all cash deposited during the period of November 10 to December 30 above a threshold of Rs 2.5 lakh in every account,” Revenue Secretary Hasmukh Adhia had said on November 10. “The department would do matching of this with income returns filed by the depositors. And suitable action may follow.”
These changes are implemented in the income tax laws soon after certain unaccounted deposits in old denominations are noted.
The substantial increase in the Jan Dhan Accounts raised the suspicions on the illegal deposits. Within the period November 9-23 the massive deposits totaling Rs 27000 crores were noted. It is believed that a lot of money is passing into Jan Dhan Accounts through illegal channels by some big shots offering 30-35% returns.
However, the verdict allows people to come clean at a 50% cost.
Though government demonetized Rs 500 and Rs 1,000 currency notes on November 8th, limited use of these currencies is allowed till November 24.
After carrying out with various extensions, December 15th is marked as the final date for the usage of Rs 500 notes and Rs 1000 notes are not usable anywhere now, except for depositing in bank accounts. Old notes can now be exchanged for now only at Reserve Bank of India offices.
Swapping of old notes with new notes proceeded till November 24. Further, the exchange of old denominations is now possible only at the Reserve Bank of India offices.