Deposits above Rs 2.5 lakh to face tax, penalty on mismatch

Further dangling the stick, government tonight warned that cash deposits above Rs 2.5 lakh threshold under the 50-day window could attract tax plus a 200-percent penalty in case of income mismatch.

Revenue Secretary Hashmukh Adhia said last night,

We would 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. And suitable action may follow

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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 percent of the tax payable would be levied as per the Section 270 (A) of the Income Tax Act, he said.

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The government has allowed citizens to deposit in their bank accounts old currency of Rs 500 and Rs 1,000 denominations, which had been declared invalid in the nation's biggest crackdown on blackmoney, corruption and counterfeit notes, between November 10 and December 30.

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Revenue Secretory also said that,

Tax plus penalty of 200 percent will be levied on cash deposited in bank accounts but not matching with income declared. Government to get report of cash deposited in bank accounts above limit of Rs 2.5 lakh during 50-day window ending December 30.

Also read : What RBI wants you to know on the Rs 500, Rs 1,000 note exchange

Taking a firm stand on corruption, Prime Minister Narendra Modi recently announced the scrapping of all Rs 500 and Rs 1,000 notes with immediate effect.