Along with promoting digital transactions in the modern era, the government is strict on cash transactions. Recently, the Income Tax Department has implemented new rules, under which it has become necessary to clarify the source of money while depositing cash in the bank. If this is not done, you may have to pay 60% tax along with surcharge and cess.
Why this rule came into force?
According to the Income Tax Department, large cash without sources can be considered under money laundering or illegal financial activities.
To avoid this, this rule has been implemented, so:
Black money can be banned. Financial transactions should be more transparent.
How do you feel tax?
If the source of the cash amount is not mentioned, the Income Tax Department can impose the following tax and fee:
60% tax 25% surcharge 4% cess
In this way your total liability can reach 89%.
How much is it necessary to tell the source on how much amount?
Savings Account: It is mandatory to tell the source on depositing ₹ 10 lakh or more. Current Account: The source will have to be clarified on depositing ₹ 50 lakh or more in traders and commercial accounts.
Precautions and suggestions:
Keep evidence of the source: Before depositing cash, keep the documents that clarify the source of money ready. Prefer digital transactions: Transactions through digital medium are more secure and simple than cash transactions. Follow tax rules: Keep all income and cash accounts.
Results for violating rules:
Notice can be obtained from the Income Tax Department. A large part of the deposited amount can be deducted in tax and penalty. Legal proceedings can also be taken.