This piece will clarify a lot of information on how you can deposit, withdraw and exchange the demonetized Rs. 500 and Rs. 1000 notes. We also shed light on the Rs. 2. 5 lakh cash deposit and calculation of tax on black money.
How much money can I deposit in the bank?
You can deposit any amount of money. You can take bundles of Rs.500 and Rs. 1000 notes and deposit them. But you can withdraw Rs. 4000 in the form of new notes, the rest goes into your bank account, the one that has your PAN number.
The deposits must be disclosed, as informed by Hasmukh Adhia, the revenue secretary. For example, you cannot be having an income of Rs. 2 lakh per year and then deposit Rs. 5 crore. To simplify things, monitoring is done usually for banks that carry deposits in excess of Rs.250,000. This is feasible, as most people, usually the older population, trend to keep a few lakh rupees at home.
How much money can be exchanged and withdrawn in place of demonetized Rs. 500 and Rs. 1000?
The RBI has laid down a detailed procedure for the exchange of demonetized notes of Rs. 500 and Rs.1000. Following are the things to note
- You have until December 30 2016 to tender the old Rs. 500 and Rs. 1000 notes to any bank branch, post office or RBI office to any branch and get them exchanged.
- Cash withdrawals are allowed up to Rs. 10000 per day and Rs. 20000 per week from November 9 to November 24, 2016.
- For exchanging cash, the old bank note up to Rs. 4000 per person can be exchanged for new Rs. 500 and Rs. 2000 notes as well as Rs. 1000 notes at the counter of bank branches from 10th November 2016, after you fill up with a form and attach a valid ID proof.
- ATMs will dispense bank note of Rs. 50 and Rs. 100 denominations. Cash withdrawals from ATMs are limited to Rs. 2000 per day per card up to November 18 2016, after which the limits will be hiked to Rs. 4000 per day.
Exceptions are government hospitals, train and airline booking, CNG stations, petrol pumps, crematoriums, state government recognized milk shops, ration shops and utility bill payments where one can use the old Rs. 500 and Rs. 1000 notes till November 14. International airports have been asked to facilitate exchange of notes amounting to Rs. 5000 ($74) for foreign tourists.
After December 30, there will not be any restrictions and you can withdraw whatever money you want, and even keep it in the house, the notes will be the new Rs. 500, Rs.1000 and Rs.2000 ones, which are legit. And no, the new notes cannot be tracked. The information about GPS tracking and embedded chips are all hoax.
Tax on cash deposits above Rs.2.5 lakh limit
If you can prove the money that you deposit, there is no problem. In fact, if the cash deposit is under Rs. 2.5 lakh, you do not need to prove it. Cash deposits above Rs. 2 lakh in the 50-day period can attract tax plus 200 percent penalty, if you cannot prove the income. For unproven deposits above Rs. 2. 5 lakh limit, you have a 30 percent tax in addition to a 200 percent penalty. So, you can expect a 90 percent tax which balloons to 92.7 percent tax, when you include a 3 percent cess.
For deposits above Rs. 1 crore, there is a 12 percent surcharge, which mean the amount is taxed to 103 percent. In this scenario, you are not only paying the full amount as tax, you must pay more for penalty and surcharge. That is why, if you have unaccounted money, it is best to declare it as income for the year and pay 30 percent tax on it. .
Tax Calculation for Black Money
Daily Deposit tips for Rs. 500 and Rs. 1000 notes
Deposit the money and pay the 30 percent tax, declare it as income. For amounts less than Rs 2.5 lakh, simply deposit it in the bank, you may not need to prove it. For people who think about paying less than Rs 2.5 lakh in multiple banks and escaping the monitoring dragnet, it is not possible, because the bank accounts in which deposits are done, are tracked to the PAN number, which is essential for deposits. The Income Tax Department has included a new window in their I.T E-filing website called ‘Account Cash Transactions’. This means when the cash is deposited in the bank account, the amount is immediately reflected on the window of the IT Department. Bank servers are linked to the CPU of the IT Department for cash transactions.
To prevent AIR (Annual Information Return) from going from bank to IT department for inquiry, you can limit the daily deposit of the money in the following way
Rs. 49,000 per day maximum and Rs. 9,90000 per year in the savings account
Rs. 199000 maximum per day and Rs. Rs.49,90,000 maximum in the current account.
Please note while depositing, run a check on you have already deposited from April 16 till today in respective accounts and deposit only balance amounts as per the above limit. Please follow the above limits to prevent further income tax complications and notices. Ensure that you mention the correct PAN for each account.
Read about the effects of demonetization of the Indian rupee.