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Unexplained Cash, Valuables In Your A/c; Taxmann To Levy Up To 83% Income Tax

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In a case if you had made a large unexplained cash credit to your bank account that is unearthed by the department of income tax, you will be required to pay a huge tax.

Unexplained Cash In Your A/c; Taxmann To Levy Up To 83% Income Tax
 

In accordance with Section 69 of the Income Tax Act, if a person is found to be owning any money, jewellery, gold or other valuables in the previous year that is not recorded in his or her books of account and also the concerned fails to provide any explanation concerning the nature as well as source of such an acquisition or if the AO does not considers the explanation as satisfactory, then such a possession shall be considered as the income of the taxpayer for such year.

Further this unexplained cash or other valuables shall be taxed at a high rate of 83.25% (60% tax + 25% surcharge+ 6% penalty). Also for such unaccounted money there is provided no basic exemption limit, regardless of the tax slab. Nonetheless, if the cash credit has been reflected in the ITR and tax has been paid in lieu of it on or before the end of the relevant previous year, then the penalty of 6% shall not be charged.

Also, other than the money, valuables or gold, any cash credited to the books of the taxpayer for which he or she offers no explanation on the nature as well as source or the authorities seem unsatisfied from the explanation, is also taxed at a huge rate as specified above. Further this cash entry is referred as 'unexplained cash credit' under Section 68 of the Income Tax Act.

After the sudden scraping of Rs. 500 and Rs. 1000 bank notes in 2017, many taxpayers deposited huge sums of cash in their bank account which was scrutinized by the income tax department. Later the taxmann allowed for a provision as per which taxpayers were asked to pay taxes on such undisclosed income without any further scrutiny.

GoodReturns.in

Read more about: income tax income tax act
Story first published: Monday, August 24, 2020, 16:36 [IST]
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