There is a famous saying, "Make sure you pay your taxes; otherwise you can get in a lot of trouble."
– Richard M. Nixon
Yes, paying your taxes is both an obligation and a duty. Unfortunately, you and other citizens love to evade taxes. This is what our Finance Minister, Arun Jaitley, had to say on evasion of taxes. "Over decades tax evasion had become a way of life. We are largely a tax non-compliant society. When too many evade tax, the burden falls on those who are honest." Now, many citizens of India never bother to pay their taxes unless forced to do so. Our Prime Minister Narendra Modi decided that enough was enough. It was time for the citizens of India to pay their tax dues.
The Prime Minister demonetized Rs 500 and Rs 1000 notes on November 8th 2016. Within minutes, 86% of the currency in circulation was no longer legal tender. Citizens of India could deposit their old 500 and 1000 rupee notes in banks and post offices till December 30th 2016, up to any limit. One of the main aims of demonetization was to destroy corruption and terrorism in India, fueled by the spread of black money in the economy. Now, you and other tax evaders had a big problem. You loved to hide black money in Rs 500 and Rs 1000 rupee notes under your mattress or in your cupboard?
After demonetization you had no choice but to deposit these old notes in your bank account, hoping against hope that the tax department would not catch you. The Government had offered you a tax amnesty scheme where you could declare your black money and pay tax + penalty and escape...But, you ignored this opportunity.
Now, you are worried. Will the tax department catch you? Want to know more on tax planning? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice / education to ensure that you are not mis-guided while buying any kind of financial products.
The tax department is using data analytics popularly known as Big Data to catch tax evaders. The tax department is very interested in cash deposits made after demonetization. The tax department is using advanced tools to detect suspicious transactions made after demonetization. The system Red Flags any suspicious transactions and the tax department might enquire how you got this money and whether you have paid taxes on it.
You file income tax returns and don't declare this money? If you have deposited more than INR 2 Lakhs in cash after demonetization, you have to mention this while filing ITR. The tax department will use data analytics to detect these suspicious transactions and if you don't mention the cash deposits, you could get a tax notice.
Data analytics is a big weapon in the hands of the tax department. The tax department can match your PAN with information stored in various databases and isolate deposits with a common address, email id, mobile number or even joint ownership of assets and investments. Data analytics can easily establish a link between your income, deposits and investments and raise a red flag if it detects anything suspicious.
Yes, the tax department could always track your transactions from traditional sources like banks. You might be knowing this, but here's the catch. The tax department is now using social media to track your spending patterns. If you don't file taxes or pay too little in tax and post pictures of a luxurious lifestyle on social media sites, you could be in deep trouble. You might have enjoyed a luxurious tour of the US and posted pictures of your holiday on social media sites like Facebook.
The tax department now has its eye on you. If you have been on a luxurious holiday, it checks the ITR you have filed. If the tax department finds you have not paid taxes, or paid too little in tax, you could get a tax notice. The tax department has caught you, even without raiding your home.
The tax department is tracking your bank accounts, property registrations, tax returns, social media posts, foreign travel, cash deposits, well, pretty much everything. The place for you and tax evaders to hide black money is shrinking. Better pay your taxes. Be Wise, Get Rich.
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