To combat corruption, cash deposits above Rs2.5 lakhs could attract tax and beside 200% penalty on case of income mismatch, said the government on Wednesday.
The announcement was made a day after Indian Prime Minister Narendra Modi announced 500 and 1000 rupee banknotes a not longer legal tender in a move to flush out untaxed money and will be replaced by new 500 and 2000 rupee notes.
On Wednesday Indian Finance Minister Arun Jaitley said that people can deposit as much cash they want in banks to get new notes but added all the deposited amount will be open to tax scrutiny.
After Jaitley’s announcement revenue secretary Hasmukh Adhia said, “All cash deposited during the period of 10th November to 30th December above a threshold of Rs 2.5 lacs in each account will be scrutinised. We would match deposited amount with the income returns filled by the depositors. And accordingly suitable action may follow,”
He added that amounts that don’t match the income sources will attract 30% tax and a penalty of 200% on the taxable amount.