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Business News » Personal Finance News

ITR-1 Form: Disclose information on Rs 2 lakh cash deposit or pay 77% penalty

Thus, the only way to avoid the penalty is  to disclose the details of cash deposited during the demonetisation in the tax return. 

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ITR-1 Form: Disclose information on Rs 2 lakh cash deposit or pay 77% penalty
If you are planning to get away from disclosing the amount, think twice. Photo: Pixabay
Written By: Hitisha Jain
Updated: Wed, Apr 05, 2017
01:52 pm
Mumbai, ZeeBiz WebDesk
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The Income Tax Department has asked taxpayers to disclose with their IT returns if they deposited over Rs 2 lakh in their bank accounts during demonetisation period. 

Although Prime Minister Narendra Modi-led government had categorically said that individuals depositing upto Rs 2.5 lakh in their bank accounts will be not be questioned, this comes as a rude shock to many. 

If you look at Part-E in the new ITR-1 form called Sahaj, every taxpayer has to disclose information on cash deposits of Rs 2 lakh or more. 

ALSO READ: Income Tax Filing: What is Sahaj? Here's all you need to know about new ITR-1 Form

According to a PTI report, which quoted a senior tax officer stating, "This is just an effort to ascertain what deposits were made during the demonetisation period. The department has not issued notices in cases where the deposit amounts were small."

What if a taxpayer does not disclose that income?

So, if you are planning to get away from disclosing the amount, think twice. 

Explaining the effects of not disclosing the deposits of demonetised notes, Chetan Chandak, head of Tax research, H&R Block India, said, "The government’s intention behind asking this information in the tax return may be two fold."

The government may be trying to aggregate  the total amount of cash deposited in all the accounts of an individual including the accounts where his PAN is not registered.

Secondly, its intention is to identify those taxpayers who have deposited cash in excess of Rs 2.5 lakh during the demonetisation period. 

Tax department will try to reconcile the treatment of these deposits in the tax return and check whether the taxpayer has offered it under the Pradhan Mantri Garib Kalyan Yogna (paying 50% taxes and depositing 25% in the scheme) or has given some different treatment.

In case if the tax department identifies that the taxpayer has failed to disclose it in the tax return or has offered it under the normal provisions of the act and paid the taxes accordingly as per the normal rate, it will further investigate into the reasonability of such treatment. 

If the taxpayer fails to provide proper justification of a particular treatment they may have to pay tax @60% u/s 115BBE +Surcharge @ 25% of such tax along with education Cess @ 3% totaling to 77.25%. In addition to  this he may also be subjected to penalty of 10% and prosecution under the taxation laws (Second Amendment) Act, 2016.

Thus, the only way to avoid the penalty is  to disclose the details of cash deposited during the demonetisation in the tax return. 

But, if the source of these  cash deposit cannot be explained then it can be offered it under the provisions of revised section 115BBE.

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TAGS:
Income Tax ReturnSahajITR-1 FormWhat is ITR-1 FormCash deposit transactionDemonetisationcash deposit during demonetisation periodITR income discloseNarendra ModiHow to disclose blackmoney in ITRPenalty on non-disclosure of cash deposit
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