Likely Action by Income Tax Deptt. where Old Currency is Deposited in banks: Replies by Revenue Secretary
Replies given by Revenue Secretary Dr. Hasmukh Adhia on the questions relating to likely action by the Income Tax Department in respect of old currency notes of Rs. 500 & 1000 that are being deposited in banks for exchange with new currency, are as under:
No Harassment by IT Deptt for Small Cash Deposits for Exchange of Rs. 500/ 1000 Notes
Q.1 A lot of small businessmen, housewives, artisans, workers may have some cash lying as their savings at home, will the income tax department ask questions if the same is deposited in banks?
A.1: Such group of people as mentioned in the question need not worry about such small amount of deposits up to Rs.1.5 or 2 lacs, since it would be below the taxable income. There will be no harassment by Income Tax Department for such small deposits made.
Rs. 2.5 lacs is the Threshold for IT Monitoring of Cash Deposit
Q.2: Will the Income Tax Department be getting reports of cash deposits made during this period? If so, will the current threshold of reporting requirement of reporting cash deposits of more than Rs. 10 lacs will only continue?
A.2: We would be getting reports of all cash deposited during the period of 10 Nov. to 30 Dec. 2016 above a threshold limit of Rs. 2.5 lacs in every account. The department would do matching of this with income returns filled by the depositors. And suitable action may follow.
Tax & Penalty on Huge Deposit of Cash (500/ 1000 notes) not matching with Income
Q.3: Suppose the department finds that huge amount of cash above Rs.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.3: This would be treated as the 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
Buying Gold Jewellery using Rs. 500/ 1000 Notes
Q.4: It is believed that a lot of people are buying jewelry now, how does department plan to tackle this?
A.4: The person who buys jewelry has to give his PAN number. We are issuing instructions to the field authorities to check with all the jewelers to ensure that this requirement is not compromised. Action will be taken against those jewelers who fail to take PAN numbers from such buyers. When the cash deposits of the jewelers would be scrutinized against the sales made, whether they have taken the PAN number of the buyer or not will also be checked.