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Tax department will not hound small depositors: Arun Jaitley on demonetisation

"It's only people with large amounts of undisclosed monies who will have to face the consequences under the tax laws," Arun Jaitley said at the Economic Editors' conference.

By: PTI | New Delhi |
Updated: November 10, 2016 6:31:14 pm
demonetisation, jaitley, arun jaitley, Rs 500 note, Rs 2000 note, narendra modi, cash crunch, new rs 2000 note, new rs 500 note, business news Finance Minister Arun Jaitley addresses media at the National Media center in New Delhi on Wednesday. (PTI Photo by Manvender Vashist)

Assuring people that taxman will not hound those making small deposits in scrapped Rs 500/1,000 currency, Finance Minister Arun Jaitley today advised them not to throng banks as there is enough time to exchange the junked notes. He said however that those depositing large amounts of unaccounted money will have to face the consequences under tax laws, which provide for tax and a 200 per cent penalty.

“With regard to people making small deposits, nobody will face any question or harassment of any kind. People who have small amount of cash at home for exigencies and emergencies, they can deposit that in their account. And the revenue department is not going to take notice of small depositors,” Jaitley said.

WATCH VIDEO: Banks, Post Offices See Long Queues Of People For Exchange Of Rs 500, Rs 1000 Notes

He added that deposits within the tax exempted limit can always be made within the banking system without any questions being asked.

“It’s only people with large amounts of undisclosed monies who will have to face the consequences under the tax laws,” Jaitley said at the Economic Editors’ conference.

Revenue Secretary Hasmukh Adhia said Wednesday that only cash deposits of over Rs 2.5 lakh in bank accounts will be scrutinised by the tax department and in case of mismatch with I-T returns, tax plus 200 per cent penalty would be levied.

The government has allowed citizens to deposit in their bank accounts old currency of Rs 500 and Rs 1,000, which has been declared invalid in the country’s biggest crackdown on black money, corruption and counterfeit notes, between November 10 and December 30.

WATCH VIDEO: People Que Up At Banks To Exchange Rs 500 & Rs 1000 Notes: Here’s What They Said

On whether the demonetisation of Rs 500/1000 notes will help weed out black money, Jaitley said this is not an isolated initiative and the decision has to be seen in the backdrop of various steps being taken including GST roll out. “You will have the currency squeeze that will take place because a lot of static currency is not going to come back into the market. You have the GST which will be implemented, which is a far more effective system where tax evasion will be much lower and compliance will be much higher. You have parallel movement to rationalise your direct tax rate,” he said.

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