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Depositing Black Money? Get Ready For Income Tax Notices

Mr. C.S. Sudheer | Posted On Thursday, November 10,2016, 12:16 PM

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Depositing Black Money? Get Ready For Income Tax Notices



“There comes a time in the history of a country’s development when a need is felt for a strong and decisive step. For years, this country has felt that corruption, black money and terrorism are festering sores, holding us back in the race towards development.”

This is what our Prime Minister, Narendra Modi, has to say on black money. Yes, the first phase of operations is over. The mighty 500 and 1000 rupee notes have been scrapped. A big blow has been dealt to the heart of corruption. Now comes the next step….Taxing all this black money. This is what the Government is doing, to tax your black money.

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There is 200% penalty for income mismatch

All cash deposits you make, which are above INR 2.5 Lakhs, in a bank account, up to December 30th 2016, will be reported by the banks, to the tax department.

This money will be matched, with the income tax returns (ITR), you have filed. If a mismatch is found, between money deposited and income declared, you would have to pay 30% income tax on this amount. Then a penalty of 200% of the tax payable, would be charged. Yes, you heard me right. In case of mismatch between deposited money and income declared, you would have to pay 30% income tax + 200% tax liability, as penalty. This is treated as tax evasion.

Will the common man be harassed by the tax department?

Housewives, artisans, small businessmen and workers have cash lying at home. This is their savings. (Hard earned money which they save). These citizens do not have to fear the income tax department. They will not be harassed.

Can you hide this black money by buying gold jewelry?

Reports are coming in of citizens, rushing to buy gold jewelry with black money.  The tax department is aware of this. It has sent field officers to ensure, jewelers are verifying PAN (permanent account number), of buyers of gold jewelry.

The cash deposits of the jewelers, will be scrutinized (matched) with the sales made. The field officer will also check, if the jeweler has taken the PAN of the buyer. If the jeweler does not furnish PAN of buyers, he would face strict action.

Will farmers be harassed by the tax department?

Farmers making cash deposits at banks, have no need to fear, if this is genuine income. Farmers genuine income is not taxable. However, if the farmer has disproportionately high income, compared to the yield expected from his land, he has explaining to do.

What if you have to deposit money in the bank?

Simple… you can deposit any amount of money, with existing 500 and 1000 rupee notes, at banks and post offices, from November 10th till December 31st 2016. You will have to show proof of identity, at banks and post offices. This can be your PAN, Election card, Passport or Aadhaar. If your 500 and 1000 rupees is not black money, you have no reason to be afraid.

Remember: Almost all bank branches have introduced, video cameras to track depositors at bank branches.

The move to scrap 500 and 1000 rupee notes, kills two birds with one stone. It deals a severe blow to black money and corruption. Also terrorism, the scourge of our Nation, is financed by black money and fake currency. With fake notes worth nearly 400 crores in circulation, this is a measure, long overdue. Be Wise, Get Rich.

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