When Prime Minister of India – Narendra Modi took the big step of demonetizing Rs. 1,000 and Rs. 500 notes, most of the tax evaders start seeking help from Google, with “How to convert black money into white money”. And, this phrase has become one of the top queries on all the major search engines in India. India’s ban on Rs. 1,000 and Rs. 500 notes makes 86% of currency in circulation worthless.
Black money is tax evade income which is not accounted in written and not reported to the government for tax purposes. It might be earned through both legal and illegal ways. With this strong decision of Narendra Modi, black money has become useless paper. It may be an effective way to resist the creation and flow of black money in the marketplace.
If you are going to deposit your black money in the bank accounts, then you need to understand all these significant things:
- The reports of all cash deposited in Banks would be given to the Income Tax Department between 10th Nov & 30th Dec, 2016.
- If your cash amount exceeds the limit of Rs.2.5 lacs, then Income Tax department would your income returns and proper action would be taken against you.
- In this case, you will have to pay tax amount with a penalty of 200% of the tax payable. (This tax would be imposed according to the Section 270(A), the income tax Act.
- Moreover, if you are buying jewelry with cash, you need to give your PAN number. (Jewelers are authorized to ask your PAN number) Suitable action to be taken against those jewelers who avoid asking PAN numbers.
- Housewives, workers, employees, and small businessmen, who had some cash don’t need to be worried about any kind of tax. They can deposit small amount Rs 1.5 and 2 lakh as it is mentioned as below the taxable income.
- All the ATMs aren’t accepting cash deposits, they will need to be made from bank branches only.
Also, consider all these significant things
- Do not panic and start depositing your cash carefully! Check your bank accounts and see how much cash you have and how much you can deposit in Banks.
- Do not hurry! You have 49 more days to deposit cash in Banks till 31st Dec 2016. Wait for few days as there will be more clarification from Government, RBI, Bank, and Income Tax department.
- Do not accept black money from your colleagues, friends, and relatives to deposit in your bank account as you might face an inquiry on the source of generating cash.
Due to several limitations and rules, the black money can’t be deposited into the bank accounts. You can’t even spend this money in cash by purchasing property, jewelry, white goods, etc. So, it’s better to reveal your money and pay the income tax that might helpful in the development of India.
Apart from all the tax evaders, there are several innocent people who have to face several difficulties with this sudden decision. We believe that this process could have been done in a systematic way without inconveniencing the flow of money.