Deposits not matching with tax returns to attract 200% fine

If you plan to deposit more than Rs.10 lakh in your bank account in the Rs.500, Rs.1000 denominations, then it should be commensurate with your income tax returns. Else, you will have to pay tax and a 200 per cent penalty on the amount, Revenue Secretary Hasmukh Adhia tweeted on Wednesday.

“If cash amount of above Rs.10 lakh is deposited in a bank A/C, not matching with declared income, same will be treated as tax evasion,” the Finance Ministry tweeted, attributing it to Mr. Adhia.

“In such a case, tax amount plus a penalty of 200 per cent of the tax payable would be levied as per Section 270(A) of the Income Tax Act. This is in keeping with the provisions of Section 270(A), which deals with the penalty for under reporting and misreporting of income.

“…where under-reported income is in consequence of any misreporting thereof by any person, the penalty referred… shall be equal to two hundred per cent of the amount of tax payable on under-reported income Section 270(A).”

The Finance Ministry will be getting reports of all cash deposited during the November 10 to December 30 window above the threshold of Rs.2.5 lakh in each account, the tweets added. This will be matched against the income tax returns linked to that account.