Small Depositors Not To Worry, Buying Jewellery No Option For Hoarded Money

Bhubaneswar: As millions across India today scrambled to deposit and exchange their old Rs.

500 and Rs. 1000 notes in banks, banned in a surprise move by the government, Finance Minister has assured that nobody would be harassed over small deposits.

Here small deposits refer to cash deposits upto 2.5 lakhs. The amounts of Rs 1.5-2 lakh are too small and the administration will not bother to make enquire into such deposits. Anyone depositing more than this threshold amount under the 50-day window could attract tax plus a 200 percent penalty in case of income mismatch.

“The latest Income Tax slabs based on the Union Budget presented on 29th February 2016 for general taxpayers stated that till Rs. 2.5 lakhs, they won’t be paying any tax, but from Rs 2.5 lakhs to Rs. 5 lakhs, the tax will be 10 percent, for amount up to Rs 10, 00,000 it will be 20 percent, and above Rs. 10,00,000 the tax rate will be 30 percent,” informed Laxmikanta Aacharya, a tax consultant in Bhubaneswar.

“If the amount above Rs 10 lakh does not match the income declared, the person will be penalized with tax amount plus a penalty of 200 per cent of the tax payable as per the section 270(A) of the Income Tax Act,” he added.

Dipti Ranjan Behera, a Bhubaneswar-based chartered accountant echoed the same.

People may rush to buy jewellery from their unaccounted cash. But the government has strictures regarding to the sale of jewellery also. The person buying jewellery has to give his PAN number and strict action would be taken against those jewelers who fail to take PAN numbers from such buyers.

Mr Jaitley said people might face problems initially, but they would definitely benefit from the scrapping of large currency notes to end corruption, unaccounted wealth and terror financing.

Responding to allegations by critics of the move like West Bengal Chief Minister Mamta Banerjee- that the sudden move will cause immense hardship to the poor – Mr Jaitley said: “Temporary hardship is no excuse to perpetuate a system where black money prospers.