Race Game

?“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.”

?In another late night announcement, the government warned that cash deposits above Rs 2.5 lakh during the 50-day window to return 1000 and 500 rupee notes could be taxed while a 200% penalty would be applied to deposits that don’t match declared incomes.

?“We will be getting reports of all cash deposited during the period of November 10 to December 30, 2016, above a threshold of Rs 2.5 lakh in every account. The (tax) department would do matching of this with income returns filed by the depositors.

?Cash deposits above Rs 2.5 lakh could attract tax and penalty and authorities might take away 90% of your money if there is an income mismatch, according to a government decision on Wednesday.

?The announcement came a day after Prime Minister Narendra Modi created a flutter by abolishing 1000 and 500 rupee banknotes in a move to flush out money hidden from the tax man. New 500 and 2000 rupee bills will replace about 86% of all currency in circulation by value.

?Hasmukh Adhia said small businessmen, housewives, artisans and workers who had some cash lying as their savings at home need not be worried about any tax department scrutiny.

?“Such group of people need not worry about deposits up to Rs 1.5 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.

?For people buying jewellery, he said the PAN number will need to be given.

?“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 is scrutinised against the sales made, whether they have taken the PAN number of the buyer or not will also be checked,” 

Such group of people, as mentioned in the question, need not worry about such small amount of deposits up to Rs 1.5-2 lakh, since it would be below the taxable income. There will be no harassment by income tax department for such small deposits made.

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. The department would match this with income returns filled by the depositors. And suitable action may follow.

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.

The person who buys jewellery has to give his PAN number. We are issuing instructions to the field authorities to check with all the jewellers to ensure that 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