Big Alert : People depositing cash in the bank should be careful, now 60 percent income tax will be levied
Under the revised regulations, depositing cash into a bank without a valid explanation of its source could lead to hefty taxes. Individuals depositing large sums without declaring their origin may face a 60% tax on the amount.
In a significant move before the new year, the Indian government has introduced changes to income tax rules, particularly targeting cash deposits in banks. The amendments aim to tighten regulations on undisclosed income and bring more transparency to financial transactions. Millions of Indians who rely on banks for transactions will feel the impact of these changes, especially as the country increasingly adopts digital payment methods like UPI.
New Rules Could Make Cash Deposits Expensive
Under the revised regulations, depositing cash into a bank without a valid explanation of its source could lead to hefty taxes. Individuals depositing large sums without declaring their origin may face a 60% tax on the amount. This is a notable measure aimed at curbing unaccounted money and fraudulent activities.
When Does the 60% Tax Apply?
The 60% income tax on cash deposits applies only when the depositor fails to clarify the source of the money. Often, people deposit funds without explaining their origin, leaving the transaction questionable. This is where the income tax department steps in. It is now crucial for depositors to provide clear details about the source of their cash, especially for larger amounts.
What If You Can’t Prove the Source of Cash?
If you cannot explain the origin of the cash being deposited, the income tax department may issue a notice. Failing to provide documentation could lead to severe penalties, including the imposition of the 60% tax rate, along with a surcharge of 25% and an additional 4% cess. These add-ons can significantly increase the financial burden.
Why the Steep Tax?
The 60% tax rate is part of the government’s strategy to discourage money laundering, tax evasion, and illegal financial activities. Unexplained cash deposits are often treated as suspicious and are closely scrutinized by the authorities. By imposing such high taxes, the government aims to ensure financial discipline and reduce the circulation of unaccounted money.
What is the Threshold for Declaring Cash Deposits?
The rules specify that any cash deposit of ₹10 lakh or more must be supported by a clear source of funds. For current account holders, the threshold is higher, allowing deposits of up to ₹50 lakh without mandatory declarations. This relaxation is primarily aimed at business owners who frequently engage in high-volume transactions.
A Wake-Up Call for Depositors
These new rules underline the importance of maintaining transparency in financial dealings. It serves as a reminder for individuals to keep proper records of their income and transactions. Whether it’s for personal savings or business purposes, the source of every rupee deposited in the bank must be clearly documented.
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