Deposit of old Rs.1,000 and Rs.500 notes -Which transactions reported to IT Dept?

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There is a huge confusion and concern among many about tax and penalty on deposit of old Rs.1,000 and Rs.500 notes. It is a biggest fear factor among many. Hence, let us understand in detail about the same.

When you deposit old Rs.1,000 and Rs.500 notes, then such transactions will be reported directly to IT Department. These are tracked based on your PAN number. Hence, it is hard for anyone to skip from this net.

Let us understand about what sort of financial transactions will be reported to Income Tax Department by these Banks, Co-Operative Banks and Post Offices, NBFCs, Companies or even Mutual Fund companies. Such reporting method is called as Annual Information Report (AIR).

What is the meaning of Annual Information Report (AIR)?

Annual Information Return (AIR) of ‘high value financial transactions’ is required to be furnished under section 285 BA of the Income-tax Act, 1961 by ‘specified persons’ in respect of ‘specified transactions’ registered or recorded by them during the financial year.

Meaning of High Value Financial Transactions and their limits (effective from 1st April 2016)

Certain financial transactions are considered as High Value financial Transactions by Income Tax Department. Let us see the list of all such high value financial transactions. If you did any such transactions and not quoted the PAN number, then such transactions are called as “High Value Non-PAN Transaction”. Now the cash you deposit old Rs.1,000 and Rs.500 notes is also be tracked and came under perview.

Cash aggregating to Rs.10 lakh or more per year deposited in your Savings Bank or Post Office Account.
One or more time deposits (FDs but other than a time deposit made through the renewal of another time deposit) of a person aggregating to Rs. 10 lakh or more in a financial year of a person.
Credit Card payments of more than Rs.1 lakh or more by cash or Rs.10 lakh or more in any other mode per year in aggregate.
Buying mutual fund units worth Rs.10 lakh or more.
Investing Rs.10 lakh or more in Debentures or Bonds issued by any company.
Buying shares worth Rs.10 lakh or more.
If you buy or sell an immovable property worth Rs.30 lakh or more.
Payment made in cash for the purchase of bank drafts or pay orders or banker’s cheque of an amount aggregating to Rs. 10 lakh or more in a financial year.
Payments made in cash aggregating to Rs. 10 lakh or more during the financial year for the purchase of pre-paid instruments issued by Reserve Bank of India.
Cash deposits or cash withdrawals (including through bearer’s cheque) aggregating to Rs. 50 lakh or more in a financial year, in or from one or more current account of a person.
Cash payment exceeding Rs.2 lakh for buying, by any person, of goods or services of any nature.
Receipt from any person for a sale of foreign currency including any credit of such currency to foreign exchange card or expense in such currency through a debit or credit card or through the issue of traveler’s cheque or draft or any other instrument of an amount aggregating to Rs. 10 lakh or more during a financial year.
Buy back of shares from any person (other than the shares bought in the open market) for an amount or value aggregating to Rs. 10 lakh or more in a financial year.

Banks, Co-operative Banks and Post Offices report on cash deposited during 9th Nov, 2016 to 30th Dec, 2016

Now along with the above reportings, CBDT notified few changes just to monitor the cash deposits during the period of 9th November, 2016 to 30th December, 2016. The below listed transactions are also be reported as AIR.

If you do Cash deposits with Banks, Co-operative Banks and Post Office- (i) exceeding Rs.50,000 during any one day; or (ii) aggregating to more than Rs.2,50,000 during the period 09th November, 2016 to 30th December, 2016.
If you do Cash deposits with Banks, Co-operative Banks and Post Office-(i) Rs.12,50,000 or more, in one or more current account of a person; or (ii) Rs.2,50,000 or more, in one or more accounts (other than a current account) of a person.

Note–

# Rs.2,50,000 for savings accounts and Rs.12,50,000 for current accounts includes all such accounts within a single bank (irrespective of branches).

# If you have 2-3 bank account with different banks and the overall limit of such deposit not cross (Rs.2,50,000 in savings account and Rs.12,50,000 in current account) in a single bank, such deposits will not be reported.

Let us say you have an account with SBI and also with ICICI. If you deposit Rs.2 lakh in SBI and Rs.60,000 in ICICI, then it will not be reported. However, if you deposit Rs.2,60,000 in either SBI or ICICI, then such deposit will be reported.

# The Cash deposited during 9th November, 2016 to 30th December, 2016 is only considered.

# Cash deposited in New or Old currency notes in total will be considered for this limit calculation.

Where you can find your Annual Information Return (AIR) report?

PART E of Form 26AS has Details about all such Annual Information Return or AIR Transaction. If you make some high value transactions, then these transactions are automatically reported to the income tax department by banks and other authorities through Annual Information Return (AIR).

Refer few posts related to ban of old Rs.1,000 and Rs.500 notes-

Image Courtsey-Rediff.