Deposits above Rs 2.5 lakh to face tax and 200% penalty on income mismatch

On Wednesday, Central government warned that cash deposits above Rs 2.5 lakh could attract tax and a 200% penalty in case of income mismatch.

During the period of 10th November 2016 to 30th December 2016, we would be getting reports of all cash deposited above Rs 2.5 lakh in every account.

Revenue Secretary – Hashmukh Adhia said that  IT department would do matching of this with income returns filed by the depositors. And suitable action may follow. Any mismatch with income declared by the account holder will be treated as a case of tax evasion.

He further said that 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 IT Act.

The government had been declared the note of Rs 500 and Rs 1000 as illegal tender and has allowed citizens to deposit of Rs 500 and Rs 1,000 denominations in their bank accounts between 10th November to 30th December 2016. The government took this step to counter the black money, counterfeit notes and corruption.

Revenue Secretary – Adhia said that artisans, housewives, workers and small businessmen who had some cash lying as their savings at home should not be worried about any tax department scrutiny.