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BasuNivesh

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

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.

  1. 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.
  2. 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.

Categories: Banking Tax Planning
Tags: IT Reporting
BasuNivesh:

View Comments (79)

  • 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.

    Regarding this, I have an FD of 45L in SBI.I got the amount 3 years back after selling house of my late father. I have paid capital gains tax and filed returns 3 years back. Now I need money for few needs, So when it matures, I broke it into 3 Fds(20L, 10L,8L) and the rest I have used for other investments. So will this be reported as part of AIR again in 2017?

    • Sourav-In my view NO. Even if they report also, you have valid reasons to show. Hence, why to worry?

  • sir i deposited in my current a/c rs.800000...why income tax department reported these amount,if current a/c deposit limit is 12.50 lakh during 09-11-2016 to 30-12-2016

    • Praveen-Whether the limit is Rs.12 lakh or Rs.1 Cr, if the source of deposited money is accounted, then why you have to worry? Show them the source.

      • Sir i have trading bussiness maintain cash in hand rs.8 lakh from cash sale on 08-11-2016 and same is deposited in my current a/c...now in online notice received from ITD how can i disclose these amont weather by my cash book or bank book..

  • I got message from income-tax department about deposit 500000 rs in my account
    But I deposited only 2.40 lakh
    Now they tell to give report
    What to do?
    Plz help me

  • Hello Basu, My name is Neha and I am house wife. I am earning part time as an online freelancer writer. I have deposited One lakh Eighty thousands in my account due to demonetization. This I saved from my home expenses as cash in about 10 years (given by my husband for house hold expenses). I have never filed ITR before as my taxable income is not much. And this year also I think my gross income will be around 2.40 lakhs which will be below tax limit.

    My query is, will my deposited cash money counted as an income for this year Or my income will be counted as 2.40 lakhs only? Also is it mandatory for me to file the return this year?

    Thanks for all your help in advance.

    • Neha-You no need to worry. Your income is never crossed the basic exemption limit. Hence, you not filed. But make sure to show your proof of income if IT Dept ask the source of the deposited amount. Again, this Rs.1.80 Lakh is below basic exemption limit. Hence, you no need to worry.

      • Thanks for your reply, My income generally deposited in my bank from Adsense and few freelancing sites via PayPal. So I think i have proofs for them. But I dont have any proof or source for the cash deposited money which i saved from last few years. I hope that will not be a problem.

      • Thanks for your answer. My income comes generally from adsense and few freelancing sites via PayPal. So I think i have proofs for that. But I dont have any source/proof of cash deposited money 1.80 Lakhs.

  • A minor above 10 year has a saving account operated by self. Can his grandfather deposit old 500 and 1000 in his account and how much amount he can deposit?

    • Priya-There is no such limit. But if IT Dept scrutinize then the guardian must be in a position to inform the source of money deposited. Also, in my view the guardian's consent letter required to deposit in minor account.

  • Hi dear,

    Let's assume that I have Rs. 1,25,000 in cash that I and my wife have saved over some time, as we keep doing regularly. In a gullock and elsewhere. This amount is for LIC and other payments.

    Contributions are made out from the salary, as and when we get a chance. I don't remember when we saved and how much we put in. But it's all my salary savings.

    Hope there isn't any worry in depositing the amount. As I mentioned, there's not a penny by penny account but it's all hard earned money.

    Suggestions required:
    1. Do I deposit in 1 account, 2 or more?
    2. In case I get a notice from IT, how should I be prepared for it?

    Thanks and regards,
    Vijay

    • Vijay-1) If it is accounted cash, then in one account and no need to worry.
      2) They can understand the proportionate % of cash holding based on your salary income and the IT return you filed. They just catch BIG FISH.

      • Hi sir,
        I have deposited Cash of rs. 200000 and 40000 in cheques and transfer 20000 frm my frnd. totally my deposits are 260000. From 9 th nov. To till now.soMy question is my above 2.5lkhs limit is taxable??

        • Imran-Fund transfer and deposits are not taxable. However, you must show the source of cash if IT Dept ask you.

  • sir
    i have two a/c in one my wife in first name/second i am and in other a/c i am in first name/second name my wife.
    than can i deposit 2.5*2=5L yes or no

    KUMUD

  • Dear Sir,

    In my current account cash was transferred online, I have withdrawal cash by self above Rs. 1 Cr. before 8 nov 2 months back. Now I have no way to deposit the same cash in same account. Is there any loss to me for this ?

  • Sir, I have withdrawn cash by ATM of Rs. 450000/- from my salary account since April 2016.....can I deposit the same or less amount in the same account or different accounts? i do not want the hassle to get a notice from IT & then send all the explanation since whatever the query is...ultimately it becomes the source of corruption by IT officials. Please reply. Thanks

    • Hemal-It is your accounted money and hence even if you deposit Rs.4,50,000 fully you have valid reason to show the proof to IT Dept. Why to worry?

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