Scrapping of Rs. 1000 and Rs. 500 notes are largely affecting the public. The government has made such a dire step to avoid black money, corruption and duplicate notes ie; Demonetization.
Following this drastic step, the Government has earlier directed the Income Tax Department to co-ordinate with all banks and to submit the details of individuals who effects transactions at the value of Rs. 2 lakhs.
In addition to this, the Revenue Secretary has clarified that a penalty up to 200% will be levied on cash deposits exceeding 2.5 Lakhs in case of income mismatch. He said that cash deposits above the threshold not matching with tax returns will be treated as tax evasion and a 200 percent penalty will be imposed under section 270(A) of Income Tax Act.
With an aim to penalize the taxpayers who effects transactions up to 2.5 lakhs under the 50-day window for exchange of old Rs 500 and Rs 1000 currency notes, the provisions of the Income Tax laws will be modified. Section 270(A) of the Income Tax Act will be amended to incorporate 200% penalty on the amount of tax payable.
