50-day deposits of demonetised notes above Rs2.5 lakh to face tax, penalty on mismatch
10 November 2016
Counterfeiters and black money holders will have to look for cover afresh after the government on Wednesday warned that while the 50-day grace period would facilitate exchange of the discarded Rs500 and Rs1,000 notes, any cash deposit above Rs2.5 lakh during the 50-day window could attract tax plus a 200 per cent penalty in case of income mismatch.
"We would be getting reports of all cash deposited during the period of November 10 to December 30, 2016, above a threshold of Rs2.5 lakh in every account.
"The (tax) department would do matching of this with income returns filed by the depositors. And suitable action may follow," revenue secretary Hashmukh Adhia said tonight.
Any mismatch with income declared by the account holder will be treated as a case of tax evasion.
"This would be treated as a case of tax evasion and the tax amount plus a penalty of 200 per cent of the tax payable would be levied as per the Section 270(A) of the Income Tax Act," he said.
Holders of discarded Rs500 and Rs1,000 notes can get these exchanged at bank branches across the country between 10 November and 30 December, but these will be scrutinised for sources and possible mismatches.
However, such scrutiny will not adversely affect small businessmen, housewives, artisans and workers who hold some cash in hand or their savings at home, Adhia said.
"Such group of people... need not worry about such small amount of deposits up to Rs1.5 or 2 lakh since it would be below the taxable income. There will be no harassment by the Income Tax Department for such small deposits made," he said
On people resorting to buying of jewellery, he said persons buying jewellery has to provide the PAN number.
"We are issuing instructions to the field authorities to check with all the jewellers to ensure this requirement is not compromised.
"Action will be taken against those jewellers who fail to take PAN numbers from such buyers. When the cash deposits of the jewellers would be scrutinised against the sales made, whether they have taken the PAN number of the buyer or not will also be checked," he added.