The Reserve Bank of India has decided to stop issuing Rs 2000 notes. Since then, individuals have been going to the bank to exchange or deposit their 2000-rupee notes. In contrast, if you go to the bank to exchange 2000 rupee notes, you can get 10 of them changed. However, do you know under what circumstances you may also receive a notice from the Income Tax Department?
Rs 2000
If any transaction falls below the RBI-set threshold, the Income Tax Department will not send a notice. However, if there are additional bank account activities, the Income Tax Department may have queries. Tax professionals claim that if a sizable sum is put into a savings or current account, questions about the source of the funds may be asked.
Income Tax Division
On the other hand, the Income Tax Department has the right to inquire about any cash deposits into the savings account that total more than Rs 10 lakh. Cash deposits into an account of greater than Rs 10 lakh are recorded in the Statement of Financial Transactions (SFT). In addition, SFT reporting is required whenever more than Rs 50 lakh in cash is placed into a current bank account.
Revenue Tax
On the other hand, there is no reason to freak out if you receive a letter from the Income Tax Department. This does not imply that you will be subject to any punishment. When the Income Tax Department inquires about the source of the money, you will need to provide all pertinent information and explain where the money originated from. Action can be taken, though, if the source of the funds is not made known.
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