Skip to main content

Now, bank deposits since Nov 8 may attract 60% income tax

Govt extends exemptions till December 15; bans Rs 1,000 notes, exchange of old currency

The Union Cabinet late on Thursday cleared a proposal to amend the Income Tax (I-T) Act to levy close to 60% deduction on unaccounted deposits in banks above a threshold, said sources.

The decision was purportedly prompted by a surge in deposits — about ~20,000 crore, according to some reports — in Jan Dhan accounts since November 8, when the central government announced the demonetisation of Rs 500 and Rs 1,000 currency notes. The amount deposited in this period is almost 50% of the total deposits in these accounts in the two years since their launch. The move is also aimed at preventing black money holders from circumventing existing I-T Act provisions.

Also, earlier in the day, the government, facing severe attacks over difficulties in implementing demonetisation, extended till December 15 the facility of using old Rs 500 notes in public utilities and included more services such as mobile recharge but stopped the over-the-counter exchange of defunct currencies and use of Rs 1,000 

Payment towards pre-paid mobile top-up to a limit of Rs 500 per recharge has been allowed while purchase from consumer cooperative stores will be limited to Rs 5,000 at a time, an official release said. Also, payment of fees up to Rs 2,000 per student has been allowed in schools and colleges run by central and states governments, municipalities and local bodies.

Current and arrears dues payments will be limited to only water and electricity, a facility that will continue to be available only for individuals and households. However, the release said payments for the transactions under all the exempted categories will now be accepted only through old Rs 500 notes.

“Considering that the Ministry of Road Transport and Highways have continued the toll free arrangement at the toll plazas up to December 2, it has been decided that toll payment at these toll plazas may be made through old Rs 500 notes from December 3 to December 15,” it said.

Foreign citizens will now be permitted to exchange foreign currency up to Rs 5,000 per week. Necessary entry to this effect will be made in their passports, it said.

Explaining the reason for discontinuance of exchange of the defunct notes, the release said it has been observed that over-the-counter exchange of the old notes has shown a declining trend.

The Cabinet decision was called in the late evening.

Its reported decision was also significant since the current provision of 30% tax and 200% penalty could be circumvented by those who may deposit black money but pay tax in advance. In that case, imposing a penalty could become a vexed issue under the current I-T Act.

There was no official briefing on what transpired in the meeting as Parliament was in session.

However, sources said the government was keen to tax all unaccounted money deposited in bank accounts in denominations of old currency notes from November 10.

Earlier, officials said a 30-per cent tax plus a 200-per cent penalty on top of a possible prosecution in cases where black money holders took advantage of the 50-day window. This means a 90-per cent tax on black money holders.

However, there were lacunae in this as black money holders can pay advance tax on their deposits and file it in their returns. In that case, penalty could not be levied in the strict sense as it was for misreported or underreported income.

Sources said the government plans to bring an amendment to the Income Tax Act during the current winter session of Parliament.

25TH NOVEMBER, 2016, THE BUSINESS STANDARD, NEW DELHI

Comments

Popular posts from this blog

New income tax slab and rates for new tax regime FY 2023-24 (AY 2024-25) announced in Budget 2023

  Basic exemption limit has been hiked to Rs.3 lakh from Rs 2.5 currently under the new income tax regime in Budget 2023. Further, the income tax slabs in the new tax regime has been changed. According to the announcement, 5 income tax slabs will be there in FY 2023-24, from 6 income tax slabs currently. A rebate under Section 87A has been enhanced under the new tax regime; from the current income level of Rs.5 lakh to Rs.7 lakh. Thus, individuals opting for the new income tax regime and having an income up to Rs.7 lakh will not pay any taxes   The income tax slabs under the new income tax regime will now be as follows: Rs 0 to Rs 3 lakh - 0% tax rate Rs 3 lakh to 6 lakh - 5% Rs 6 lakh to 9 lakh - 10% Rs 9 lakh to Rs 12 lakh - 15% Rs 12 lakh to Rs 15 lakh - 20% Above Rs 15 lakh - 30%   The revised Income tax slabs under new tax regime for FY 2023-24 (AY 2024-25)   Income tax slabs under new tax regime Income tax rates under new tax regime O to Rs 3 lakh 0 Rs 3 lakh to Rs 6 lakh 5% Rs 6

Jaitley plans to cut MSME tax rate to 25%

Income tax for companies with annual turnover up to ?50 crore has been reduced to 25% from 30% in order to make Micro, Small and Medium Enterprises (MSME) companies more viable and also to encourage firms to migrate to a company format. This move will benefit 96% or 6.67 lakh of the 6.94 lakh companies filing returns of lower taxation and make MSME sector more competitive as compared with large companies. However, bigger firms have shown their disappointment since the proposal for reducing tax rates was to make Indian firms competitive globally and it is the large firms that are competing globally. The Finance Minister foregone revenue estimate of Rs 7,200 crore per annum for this for this measure. Besides, the Finance Minister refrained from removing or reducing Minimum Alternate Tax (MAT), a popular demand from India Inc., but provided a higher period of 15 years for carry forward of future credit claims, instead of the existing 10-year period. “It is not practical to rem

Don't forget to verify your income tax return in August: Here's the process

  An ITR return needs to be verified within 120 days of filing of tax return. Now that you have filed your income tax return, remember to verify it because your return filing process is not complete unless you do so. The CBDT has reduced the time limit of ITR verification to 30 days (from 120 days) from the date of return submission. The new rule is applicable for the returns filed online on or after 1st August 2022. E-verification is the most convenient and instant method for verifying your ITR. However, if you prefer not to e-verify, you have the option to verify it by sending a physical copy of the ITR-V. Taxpayers who filed returns by July 31, 2023 but forget to verify their tax returns, will get the following email from the tax department, as per ClearTax. If your ITR is not verified within 30 days of e-filing, it will be considered invalid, and may be liable to pay a Late Fee. Aadhaar OTP | EVC through bank account | EVC through Demat account | Sending duly signed ITR-V through s