CA Haresh Kataria

Haresh Kataria

Demonetisation: Cash Deposits (during demonetisation) Regulatory and Reporting Rules for Banks and Post Offices

The Central Board of Direct Taxes vide notification No.104/2016 dated 15th November,2016 has amended Rule 114B (mandatory quoting of PAN) and Rule 114E (reporting in AIR) casting regulatory and reporting obligations on the banks and post offices for accepting and reporting of cash deposits in the bank accounts and post office accounts.

PAN Mandatory for cash deposits in bank and post offices exceeding Rs. 2,50,000 during the period 9th November 2016 to 30th December, 2016

Section 139A (5) (c) of Income-tax Act, 1961 requires that a person entering into transactions specified in Rule 114B has to quote his PAN.

Rule 114B specifies 17 types of transactions where PAN is to be quoted

Rule 114B has been amended and now PAN is mandatory for the following cash deposits in bank account and post office account :

(i) Cash deposits exceeding Rs. 50,000 during any one day (old).

(ii) Cash deposits exceeding Rs. 2,50,000 during the period 9th November 2016 to 30th December 2016 (new).

Now even a post office is also covered by this rule,

Modi Effect on Notes of Rs. 500 and Rs. 1000.jpg

Reporting of Cash Deposits in banks and post offices during the period 9th November 2016 to 30th December, 2016

Section 285BA requires specified persons to furnish a Statement of specified financial transactions (AIR) listed in Rule 114E

The statement of specified financial transactions (AIR) for the financial year 2016- 17 is to be submitted in Form No.61A by 31st May, 2017 by all the banks and post offices.

Rule 114E has been amended and now the following additional financial transactions will also have reported by banks and post offices in statement of specified financial transactions (AIR).

Cash deposits in bank account or a post office account during the period 9th November,2016 to 30th December, 2016

(i) Cash deposits aggregating to 12,50,000 or more in one or more current account of a person or

(ii) Cash Deposits aggregating to 2,50,000 or more in one or more accounts (other than current account) of a person.

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5 responses to “Demonetisation: Cash Deposits Regulatory & Reporting Rules”

  1. Aashish says:

    I am an individual where I have 5accounts in a particular bank for many years, but the bank official says the person holding the account should be there while depositing or withdrawing the money, but it is not stated in any guideline that such measures are required.
    For instance we have joint family where one person is doing the bank transaction, why is it requires all people holding the account be physically in bank , as it is before opening the account all documents are submitted in bank.

  2. Sriram says:

    We run a Spiritual Trust having 80G.
    Disciples offer donation in Hundi. We continue to receive demonetised notes in hundi.
    1) Can we account the demonetised notes even after cancelation of their legal tender and deposit in bank?
    2) Is there any cut-off date?

  3. Arun Jain says:

    Can you please suggest, i give Rs.400,000 to my mother from my Proprietorship Current account in the month of August-2016, my mother withdrawl the whole amount and give it to one of our relative on interest, now that relative has returned the whole amount in the 500 notes, now my mother want to deposit this amount in the bank account, but she doesnt have any PAN no. what i can do? Its total legal transaction and no illegal money is involved. is there any solution?

    • CA D.K.Motiwala says:

      Dear Arun G , There is two Txn 1. between u and ur mother 2. cash withdrawal by ur mother , these two txn are legal and does not cause any problem , but the 3rd txn loan of Rs.4.00 paid and repaid in cash between ur mother and borrower attracts penal action under Income Tax Act and may attract a hefty penalty if proved by Revenue Authorities .Since ur Mother does not hold a valid Pan she may face further difficulty if proved for other legal txn .

  4. M A Bakhshi says:

    It has repeatedly been clarified by the Government that aggregate deposits upto 2.5 lakhs by individuals from 9th Nov to 30th December will not be reported to the Tax Authorities.Whereas Rule 114B conforms to that assurance Rule 114E is contrary to that assurance.The said rules requires reporting of Aggregate Depsoits of 2.5 lakhs and above.In otherwords Deposits of Rs 2.5lakhs are included in the transactions to be reported.I feel this error needs to be rectified by CBDT.After all to error is human

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