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Unaccounted Bank Deposits Could Attract 60% Tax

    Mr. C.S. Sudheer | Friday, November 25,2016, 12:41 PM
 

The Government scrapped 500 and 1000 rupee notes, effective, November 8th 2016. This move is expected to break the back of corruption in India, fueled by black money. Terrorism in India, financed by fake rupee notes (especially fake 500 rupee notes), has got a severe beating. The Prime Minister, has promised sleepless nights for black money hoarders. While the poor enjoy a good night’s sleep, citizens with black money hunt around for sleeping pills.

How’s this for a fact…Prime Minister Narendra Modi, launched the Pradhan Mantri Jan-Dhan Yojana (PMJDY), on August 28th 2014, so that poor citizens of our country, could have their own bank account. Today, these PMJDY accounts opened for the poor, have deposits of more than INR 21,000 Crores. Most of this money has been deposited in the last 2 weeks, after November 8th 2016. How can the poor citizens of India, deposit so much money so fast, in zero balance accounts?  The Government believes, this is laundered black money. The PMJDY bank accounts, are being used to convert black money to white.

The Union Cabinet may clear a proposal to levy (charge), close to 60% income tax on unaccounted bank deposits, which are above a particular threshold. 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.

How will unaccounted deposits in banks be taxed?

The Union Cabinet has come up with a proposal, to amend the Income Tax Act.

Now….The highest tax slab is 30%. There is a 200% penalty, for misrepresentation of income.  

The Government has allowed citizens to deposit the old 500 and 1000 rupee notes at banks, from November 10th 2016 to December 30th 2016. Now, the Government will tax all unaccounted money deposited in bank accounts. Proposed but not yet cleared…..Taxes on unaccounted deposits in banks above a threshold, may be levied (charged) at a rate up to 60%.

This is 30% tax + 30% penalty

Yes…the taxman will come down heavily on all suspicious bank deposits….used to launder black money.

Why is the Government charging this tax penalty?

The tax department is tracking all cash deposited in banks, from November 10th 2016 to December 30th 2016, which are above a threshold of INR 2.5 Lakhs, in every bank account. The tax department had also warned, that citizens making cash deposits above INR 2.5 Lakhs after demonetization, would be charged the tax due + 200% penalty, in case of an income mismatch.

Frightened citizens with black money, have started burning their old 500 and 1000 rupee notes, afraid that they could get caught. The Government does not want these old 500 and 1000 rupee notes destroyed. With the tax penalty reduced, more citizens could deposit their unaccounted cash at the bank, within the 50-day window.

Yes…the Government is going after black money in a big way. These is no question of going back. Citizens with black money are having sleepless nights…They are searching the city for sleeping pills. However, honest tax payers are sleeping peacefully. Tax evasion is a crime…Tax avoidance is not. Be Wise, Get Rich.

Mr. C.S. Sudheer

Mr C.S.Sudheer is a management graduate. 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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