Government has announced that cash deposits above 2.5 lakh made between 10th November to 30th December will be kept under scanner from Tax Department. Any cash deposits above 10 lakhs will be consider a case of tax evasion. Any mismatch on Income will liable to 200 % Penalty above income tax as per the Section 270(A) of the Income Tax Act. People are worried that how to calculate income tax and Penalty of 200% above tax. This 200% tax penalty concept may be new for many of us. Calculation of tax and 200% Penalty is explained below. Here it is assumed that the account holder who is depositing cash is a small business man or housewives who have never paid income tax or accounted by income tax department.
Calculation Procedure of Income tax and 200% Penalty
Any deposits below 2,50,000 (2.5 lakhs) will not attract any Income tax.
As per Income tax law 10% tax is levied on income above 2.5 lakhs and up to 5 lakhs – Also called as 10% Bracket
As per Income tax law 20% tax is levied on income above 5 lakhs and up to 10 lakhs – Also called as 20% Bracket
Above 10 lakh income 30% tax is levied – Also called as 30% Bracket
Tax Penalty of 200% is levied on tax payable.
Example of above calculation
Take the case of Cash Deposits of 15 Lakhs
Total Tax in 10% Bracket: (10% of 2,50,000)=25,000
Total Tax in 20% Bracket: (20% of 5,00,000)=1,00,000
Total Tax in 30% Bracket: (30% of 5,00,000)=1,50,000
Tax Payable: 2,75,000 (2.75 Lakhs)
200% tax Penalty:(200% of 2,75,000)=5,50,000 (5.5 Lakhs)
Total Tax Payable: 8,25,000 (8.25 Lakhs)
Pls note that the above calculation procedure and online income tax and 200% tax penalty calculation is based on current income tax brackets of Income Tax Act. Final calculation will depend upon the actual declared income by the account holder or any further declaration by the government.