200% penalty for income mismatch, banks open on Sunday: What you should know about demonetisation

Mismatch between deposited sum and income declared would attract up to 30% income tax and 200% of tax liability as penalty

The government is closely tracking all cash deposits into banks and has warned that deposits above Rs 2.5 lakh threshold under the 50-day window could attract tax plus a 200 percent penalty in case of income mismatch.

Here is everything you should know

1. 200% penalty The finance ministry on Wednesday warned that any mismatch between the deposited sum and income declared would attract up to 30 per cent income tax and 200 per cent of tax liability as penalty.

The (tax) department would do matching of this with income returns filed by the depositors. And suitable action may follow.

Any mismatch with income declared by the account holder will be treated as a case of tax evasion. However, Revenue secretary Hashmukh Adhia said small businessmen, housewives, artisans and workers who had some cash lying as their savings at home should not be worried about any tax department scrutiny.

 

2. Jewellers to show PAN too Jewellers not furnishing the permanent account number (PAN) of buyers would face action, the ministry cautioned, even as there was rush to buy gold on Wednesday.  When the cash deposits of the jewellers would be scrutinised against the sales made, whether they have taken the PAN number of the buyer or not will also be checked.

“It should be clear that it’s no 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 said. 

3 Show PAN for cash deposits above Rs 50,000: It should be noted that one has to furnish PAN in cash deposits of ~50,000 and above. This is information goes to the tax department. However, following demonetisation of ~500 and ~1,000 notes, the government is giving relief up to ~2.5 lakh of deposits. 

4. Banks will remain open on Saturday and Sunday
Meanwhile, the government tried to calm people who might have to queue up to withdraw money from banks on Thursday. A Reserve Bank of India (RBI) notification said banks would remain open on Saturday and Sunday, too, for the benefit of the public. However, a call is yet to be taken on keeping banks open on Monday, which is a holiday. 

5. New notes will be issued from today Jaitley said  RBI will issue new Rs 500 and Rs 2,000 notes from Thursday. 

6. Rail, metro stations and toll gates to accept old notes “We will tweak the cash withdrawal limits on an ongoing basis. Railway stations, medicine outlets, toll gates and ASI buildings will accept old notes,” said Jaitley.

7. ATMs will be continuously refilled
Financial Services Secretary Anjuly Chib Duggal said banks had been asked to open more counters and keep refilling ATMs. She said her department was in touch with RBI and was monitoring cash availability. 

8. ID proof is a must
Prime Minister Narendra Modi had, on Tuesday, announced existing ~500 and ~1,000 notes could be deposited by people in banks and post offices between November 10 and December 30 by showing identity proof.

9. No limit to deposits
There is no limit on such deposits, but if old notes are exchanged for new ones, there is a cap of  Rs 4,000 till November 24. There will also be a cap of  Rs 10,000 a day and  Rs 20,000 a week on withdrawals from banks and ~2,000 a day from ATMs. This limit will be increased in the coming days. 

10. Income Tax authorities are tracking everything 

Meanwhile, the Central Board of Direct Taxes is working on the role it will play once the old currency notes come up for exchange. The income tax department would work with banks and the Financial Intelligence Unit to track suspicious transactions, sources said.