With demonetisation, many citizens are concerned if the cash in hand with them will be treated as black money, and will be penalised taxed on the same if it is deposited in the bank.
During the period 9 November to 30 December, the government ha defined a maximum limit of Rs 2.5 lakh on cash deposit, which will not be under scrutiny by the income tax department. If the cash deposits exceed this limit, the bank or post office will automatically report it to the tax department. For current accounts, the threshold limit for cash deposits between 9 November and 30 December will be Rs 2.5 lakh.
But if one has more cash than the said limit, they may deposit it in their bank, but will be suject to scrutiny.
There are people who believe that the magical number – 2.5 lakh deposit, would attract a lot of attention from the tax department whereas anything below that amount would be safe and would not attract any attention. This is just a rumour and completely false. This is not an arbitrary number. It is the maximum exemption limit for income tax for individuals. But you would still have to justify any extra income that you possess via your bank statements.
If you are a salaried person or a housewife, then the savings that you accumulate over the years would still have to be accounted for by justifying it using our bank statements. The ta department would tally your withdrawals and deposits from the past, your lifestyle and the lifestyle of your spouse and then decide if the savings that you show is feasible and believable.
Advocate Anuj Aggarwal, Taxation Lawyer explains how you can deposit more cash than the limit and repond to possible enquiries from the income tax department.