New Delhi: The government has asked banks and post offices to report to the I-T Department all deposits above Rs 2.50 lakh in savings accounts, and more than Rs 12.50 lakh in current accounts, made during the 50-day window provided to tender the scrapped 500 and 1000 rupee notes.
As per a notification issued today, banks, co-operative banks and post offices will have to report to the tax department cash deposits exceeding Rs 50,000 in a single day or aggregating to more than Rs 2.5 lakh during the period November 9, to December 30, 2016.
These entities will also have to report cash deposits during the period aggregating to Rs 12.50 lakh or more, in one or more current account of a person.
The Finance Ministry has notified the amended Rule for filing of Annual Information Return (AIR) report by banking company, cooperative bank and post offices on account of aggregate cash deposits in one or more current account of a person.
Banks and post offices now have to file a statement of financial transaction in respect of these transactions on or before January 31, 2017, the notification said.
Earlier, they were required to report to the I-T Department only when cash deposits in an account exceeded Rs 10 lakh in one full year.
In view of apprehensions that large number of illegal or black money may sought to be converted into white during the window provided till December 30, the Revenue Department has issued fresh set of instructions.
In a major assault on black money, counterfeit notes and terror financing, Prime Minister Narendra Modi had on November 8 announced demonetisation of high value currency notes of Rs 1000/500 and asked the public to deposit them in banks by December 30.
Since then, seemingly unending queues of people trying to deposit and exchange their scrapped currency notes are being witnesses at banks and post offices.
Tax department officers are of the view that the 50-day window provided to people to deposit or exchange notes should not be misused and hence the need to keep a tab on such high value deposits.
Those depositing large amounts of unaccounted money will have to face the consequences under tax laws, which provide for a 30 percent tax, 12 percent interest and a 200 percent penalty.
"CBDT has brought two-fold amendment casting a reporting responsibility on the taxpayer as well as the bank, thereby ensuring that bank doesn't let go off the non-compliant taxpayers," Nangia & Co Managing Partner Rakesh Nangia said.
Tax officials said attempt will be made not to harass honest citizens who want to tender all of their legal, old high-denomination currency savings in bank accounts and get new ones, but those holding illegal money should not go scot-free.
Soon after the 50-day window to deposit and exchange notes is over, the I-T Department will look into the data of huge cash deposits and match them with the tax returns filed by the person in the previous years.
In cases of unexplained high cash deposits, the tax department will slap a hefty 200 per cent penalty even before the person files this year's annual income tax returns so as to prevent them from converting black money into white.
The tax department lens is also on those people who are depositing cash up to Rs 2.50 lakh. "In case of any big mismatch we will also look into those accounts where deposits were up to Rs 2.50 lakh," an official said.
Besides, the tax department is also collating data on spurt in deposits in zero-balance Jan Dhan accounts and will slap a 200 per cent penalty on unexplained high value cash deposits.
As per the data, cash balances have started popping up in millions of Jan Dhan accounts, opened under a government scheme for beneficiaries to get their entitlements like LPG subsidy.
"Tax Department is collating data on spurt in Jan Dhan accounts. It will analyse all data and impose tax plus a 200 percent penalty in cases of unexplained high value deposits," the official said.
Under Section 12 of the Prevention of Money Laundering Act, tax department can ask for any information from any agency including the Reserve Bank of India and cooperative banks besides all scheduled banks.
Finance Ministry has brought out a series of newspaper advertisements assuring people that their hard earned money is safe and depositing junked Rs 500/1,000 notes of up to Rs 2.50 lakh in bank accounts will not be reported to the tax department.
It has also stated that farm income continues to remain tax free and can be easily deposited in bank.
Small businessmen, housewives, artisans, workers can also deposit cash in their accounts without any apprehensions, it has said.
On farm income, the official said the tax department will match the acre of land the person has and the deposits made in the bank account to identify any discrepancy.