New Delhi, Nov 10: A day after announcing the withdrawal of Rs 500 and Rs 1,000 notes, the Modi government made it clear that deposits of old currency would not enjoy immunity from tax.
“This is not an immunity scheme. This (deposit) does not provide any relief from taxation. The law of the land will apply (on source of fund),” Finance Minister Arun Jaitley told reporters here when asked about measures taken by the government to ensure that black money did not enter the banking system.
“If the money is legitimate, which had been previously withdrawn from bank, or earned legally and saved and had been disclosed, there is nothing to worry,” Jaitley said.
Housewives, farmers and those whose annual income is within the tax exemption limit may not be hounded by tax authorities for depositing up to Rs 2.5 lakh of the now defunct higher denomination currency notes in bank accounts.
The government also announced a stiff 200% penalty on cash deposits above the 2.5 lakh limit in addition to deduction of income tax on previously undeclared income.
“The (Tax) Department would match this with income returns filed by the depositors, and suitable action may follow,” Revenue Secretary Hashmukh Adhia said.
Any mismatch with income tax returns filed by the depositors would be considered as a case of tax evasion.
Finance Ministry officials said the tax authorities would keep a close watch on high-value deposits.
Banks will start accepting cash deposits of old currency from Thursday and the government has made adequate arrangements for people to exchange notes that have ceased to be legal tender.
The finance minister also termed as “exaggerated”, reports about a spike in conversion of hard cash by purchasing gold.
“Those who indulge in this trade will run a high risk,” he said adding that the government had the means to keep a track of high value transactions.
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