The Government had scrapped 500 and 1000 rupee notes, effective, November 8th 2016. Now, citizens are rushing to banks, to deposit their old 500 and 1000 rupee notes. There is no limit on cash deposits that can be made at the bank.The tax department does not ask any questions, on cash deposits up to INR 2.5 Lakhs, deposited at the bank. Many citizens are making multiple cash deposits in their bank accounts, without quoting PAN.
The limit of cash deposit without PAN, is up to INR 50,000 per day. Citizens having black money, are depositing less than INR 50,000 a day, to escape showing PAN details. The Government has issued a circular. Deposits made between 9th November 2016 and 30th December 2016 will require PAN, if the combined sum you deposit, exceeds INR 2.5 Lakhs.
Now farmers are worried. Many farmers have just harvested their crops and received payment, in old 500 and 1000 rupee notes. As farmers rush to banks to deposit cash, they have a big worry…Will these cash deposits be taxed? Want to know more on tax planning? Just leave a missed call on IndianMoney.com financial education helpline 02261816111 or just post a request on IndianMoney.com website. IndianMoney.com offers Free, Unbiased and on-call financial advice on Insurance, Mutual Funds, Real Estate, Loans, Bank Accounts and capital markets.
There is no tax on agricultural income earned in India. Yes…No matter how much you earn as agricultural income, you do not have to pay tax. No political party dare mess with this rule. The consequences are severe, as farmers are a large voting base, for most political parties. Farmers with genuine agricultural income, have no need to worry.
They can deposit their money in banks, in old 500 and 1000 rupee notes. This agricultural income is not taxed. Farmers should deposit their money with banks, where their money is not only safe, but also earns interest.
Yes, if farmers make cash deposits at the bank, where they try to hide non-agricultural income as agriculture income, they could face a problem. The tax department will thoroughly check all high value cash deposits, to see if they match land holdings of the farmer and the corresponding crop yields.
The high value cash deposits the farmer makes, should match the land he owns and the crop yield of the land. If there is a mismatch, (cash deposits made are far in excess of land he owns and crop yields), then the farmer has to explain the difference.
Yes…sowing season is coming up. Farmers can buy seeds with their old 500 rupee notes. These seeds can be purchased from central or state government units, public sector undertakings, national and state seeds corporation and even the Indian Council of Agricultural research.
All you have to do is show proof of identity that you are a farmer. With the Rabi season coming up, this move is expected to benefit farmers. Farmers can withdraw up to INR 25,000 a week, against crop loans sanctioned and credited to their accounts. The time limit for the payment of crop loan insurance premium, has also been extended by 15 days.
Yes…The scrapping of 500 and 1000 rupee notes, is not going to affect farmers. Agricultural income in India is not taxed. Farmers with genuine agricultural income, just relax…deposit the old 500 and 1000 rupee notes in the bank and rest easy. Be Wise, Get Rich.
Mr. C S Sudheer is the founder and CEO of IndianMoney.com – India’s largest Financial Education Company. He started his career with ICICI Prudential Life Insurance and later on worked with Howden India. After his brief stint in Howden India, he moved on and incorporated Suvision Holdings Pvt Ltd which is the sole promoter of IndianMoney.com. He aims to build a nation that is financially literate with investment savvy citizens.
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