If you are depositing over Rs 2.5 lakh, be ready to pay tax and penalty of 200%

Starting today, you can exchange old Rs 500 and Rs 1,000 currency notes and also deposit them in the banks till December 30. The government has set a threshold to deposit Rs 2.5 lakh under the 50-day window and if you are planning to cross it, you should have your legal documents ready or else, it will attract tax and a 200 per cent penalty in case of income mismatch.

"We would be getting reports of 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," revenue secretary Hashmukh Adhia said.

If caught under any mismatch with income declared, 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 added.

Adhia has also assured that small businessmen, housewives, artisans and workers who had some cash lying as their savings has nothing to worry about any tax department scrutiny.

"Such group of people... need not worry about such small amount of 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.

He said persons buying jewelery 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 said.
(image: IndiaTimes)