The bulk deposit of 500 and 1000 rupees notes in bank under demonetization scheme, when informed to Income tax department will attract 50% Income tax. The government is introducing amendments to the Income Tax Act which is supposed to be already approved by the Cabinet on Thursday.
This is seen as a new income disclosure scheme brought in by government in the mid of demonetization of higher currency notes happening in country. Any people who is voluntarily declaring black money deposit of cash in 500 and 1000 rupees denomination will face 50% tax on deposit. Also one-fourth of the total deposit will be locked in a zero-interest instrument for four years. Online calculation of the tax and locked income is shown below.
If you are voluntarily declaring your cash money in the form of black money then your are liable to pay 50% income tax and 25% of your money will be locked-in for 4 years and you will not get any interest amount on this. You will only get 25% of the cash for your immediate use.
But if you are not disclosing your disproportionate cash and later found to be holding unaccounted money in your accounts by the income tax authorities, then you are liable to pay 90% of hefty tax.
If you are Not voluntarily declaring your cash deposits as unaccounted wealth and is found to be black money then you have to pay 60% tax and 30% penalty on total deposit and you will get only 10% of cash. Besides tax and penalty the assessees may be prosecuted under law if the money is not voluntarily declared.
Earlier there was news that the black money deposit will have 200% penalty. However tax authorities have brought more clarity on cash deposit in banks and its tax implications.