New demonetisation policy and its effect on society

The Narendra Modi government on Thursday reduce brief the cut-off date of the usage of vintage Rs500 currency notes at petrol pumps and for buying airline tickets at airports till 2 December in place of 15 December introduced in advance. The pass has come at a time while financial institution unions have demanded that the Reserve bank of India (RBI) increase the supply of notes to satisfy increasing call for money as financial institution workforce faces wrath of fatigued clients and endured coins shortages following the scrapping of Rs500 and Rs1,000 foreign money notes from 9 November. in advance, the government had said sufficient cash is available with the Reserve bank of India (RBI) and banks, and it isn’t thinking about extending the deadline of 30 December for deposit of demonetised Rs500 and Rs1,000 notes.

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The new regulations and highlights of the demonetisation drive as of 2 December are:

• With effect from 3 December, old Rs500 notes cannot be used for buy of petrol, diesel and gasoline at the stations working below authorisation of public sector oil advertising businesses and for purchasing airline tickets at airport counters, a central authority notification stated.

• The RBI on Wednesday announced that it’ll place coins withdrawal limits on Jan Dhan accounts a precautionary measure. The vital bank said that on money owed which can be completely compliant of the realize your consumer (KYC) norms—the monthly withdrawal limit has been set at Rs10,000.

• To reduce hoarding of legitimate currency notes and growing its circulate, the RBI in its ultra-modern notification allowed the withdrawal of the deposited sum in Rs2,000 and Rs500 notes, no matter the existing cash withdrawal limits.

• The proposed amendments inside the earnings Tax Act offer for black money declarants to mandatorily deposit 25% of the quantity disclosed in anti-poverty scheme with out hobby and a 4-yr lock-in length.

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greater news on demonetisation

• people who pick out to claim their sick-gotten wealth stashed till now in banned Rs500 and Rs1,000 forex notes under the Pradhan Mantri Garibi Kalyan Yojana 2016, will ought to pay a tax at the price of 30% of the undisclosed income.

• moreover, a ten% penalty could be levied at the undisclosed income and surcharge referred to as PMGK Cess at the rate of 33% of tax (33% of 30%).

• in addition, the declarants have to deposit 25% of the undisclosed profits in a scheme to be notified by the government in session with the Reserve financial institution of India (RBI).

• The money from the scheme could be used for initiatives in irrigation, housing, lavatories, infrastructure, primary training, number one health and livelihood in order that there may be justice and equality, stated the announcement of gadgets and motives of the invoice.

• For folks who retain to hold onto undisclosed coins and are caught, existing provisions of the earnings Tax regulation could be amended to provide for a flat 60% tax plus a surcharge of 25% of tax (15%), so that you can amount a levy of seventy five%.

• except, if the assessing officer comes to a decision he can fee a ten% penalty in addition to the 75% tax.

• The alternate of old currency notes over the counter at banks has been stopped. Exemptions for payment of utility payments , bills at petrol pumps and pharmacies the usage of vintage notes will retain till 15 December. but, bills can be completed simplest via antique Rs500 notes

• The Reserve financial institution of India (RBI) on Friday clarified that it will permit alternate of vintage Rs 500 and Rs 1,000 notes at its counters as much as the limits applicable according to character, despite the fact that this facility has been withdrawn from bank branches.

• The authorities on 23 November requested banks to waive the merchant cut price rate (MDR) or transaction price charged on debit card payments until 31 December to inspire more clients to use virtual transactions.

• The authorities will offer Rs21,000 crore to district primary cooperative banks (DCCBs) through NABARD to offer loans to farmers to fulfill their credit necessities during the winter crop season.

•service tax will no longer be levied on tickets booked through the IRCTC internet site from 23 November to 31 December. Rs20 is levied as carrier tax on Sleeper and Rs40 on AC lessons for booking tickets through IRCTC.

• RBI imposed stiff conditions for withdrawal of up to Rs 2.5 lakh in cash from bank debts for weddings, pronouncing the money may be withdrawn best from the credit balance as on eight November, the day demonetisation changed into introduced. even as notifying norms, RBI stated the cash withdrawn ought to be used most effective to make price to those folks who do not have financial institution money owed and the names of such recipients should be cited at the same time as applying for withdrawal of the cash.

•authorities personnel belonging to group-C on Monday began receiving Rs10,000 in cash as improve of their earnings for the month of November.

•Farmers are now allowed to buy seeds for their modern-day rabi crop with old denomination notes.

• RBI has supplied an additional 60 days for repayment of housing, car, farm and different loans well worth up to Rs 1 crore.

• The income tax department has warned people in opposition to depositing their unaccounted antique currency in someone else’s financial institution account. The newly enforced Benami Transactions Act consists of a penalty, prosecution and rigorous prison time period of a maximum seven years for violators.

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Purpose of the brand new regulations

The document will assist the government gather data approximately excessive-cost deposits made via taxpayers. This statistics may be cross-checked towards the profits declared and tax paid by way of the income tax assessee in her previous profits tax returns. The intention is to test tax evasion and lessen black money.

however, what if the person deposits extra than Rs2.5 lakh, however in accounts of different banks and submit offices? “it’s miles still no longer clean as to how such the banks will test this,” said Maheshwari. “even though the motive of this regulation appears to be getting details of deposits in all financial savings debts of such a person, nevertheless, a specific financial institution and submit office will furnish the info of deposits made with itself and won’t recognise if the man or woman has deposited any sum in some other financial institution account,” he introduced.

The government has also amended policies related to citing the everlasting account quantity (PAN) whilst depositing coins, to plug this loophole. consistent with the amended rule, individuals must provide their PAN whenever their deposits exceed Rs50,000 in a day or Rs2.five lakh in combination in the course of the stated duration. but, you will nevertheless break out without citing PAN if the amount deposited is less than Rs50,000. because the obligation of filing the file does not lie with the individual depositor, she handiest presents the PAN if the bank asks for it. however, if PAN has been furnished whilst depositing price range, it may be tracked through the department.

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How to reply to a observe

As noted, the excessive-fee deposits will get suggested and might in addition get scrutinised by using the profits tax branch. In case the department unearths a mis-suit between the income tax return filed by means of the character, and the quantity deposited, it is able to send a notice to the character looking for clarification. “As according to records received from banks and submit workplaces, tax authorities may want to provoke search complaints or ship notices asking for information regarding the nature and source of the deposits,” said Neha Malhotra, government director, Nangia & Co. you will be asked to be gift or ship your consultant to give the clarifications. “The branch troubles a note for scrutiny evaluation underneath phase 143 (2) of the Act—to be present on a certain date himself or thru a expert—for verification of information and looking for clarifications and opportunity to give this situation,” said Maheshwari.

similarly motion will rely on the documentation and explanation supplied by way of the taxpayer. “they could levy tax along with interest and penalty on underneath-said profits, if it may be mounted that such profits pertains to preceding years (prior to monetary year 2016-17) and become now not suggested with the aid of the depositor at the same time as filing the tax go back,” stated Malhotra. “It’s great to maintain the documentation substantiating the source of budget accessible,” stated Malhotra.

Matters to remember

You need to maintain tune of any and each verbal exchange despatched via the income tax department. usually, such notices have a time restriction before which they ought to be spoke back to. furthermore, you need now not panic while you receive a communication from the tax branch. read thru it and take corrective measures, if wanted. if you need extra time to provide the explanation, request the assessing officer or the individual worried, for an adjournment. you may additionally are seeking for assist of professionals, consisting of a chartered accountant or a tax consultant, in case you are not able to solve the problem in your very own.

Content Credit :- tubidy

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