Demonetization has rocked the whole lot of people . Each one form lower to upper class is affected. In one word we can say India gets “Modi-fied”.
Most of the financial and tax consultants have been flooded with the ultimate question how much to deposit ? What to do with the 1000,500 notes ? Should we continue accepting the notes for unaccounted sales ? What will happen to my life time saving ? etc..
I give herein below some tips category wise which can be followed to avoid complications in future :
Income Tax Assesses maintaining books of accounts : They should prepare their balance sheet as on 8th November ,2016 and ascertain their cash balance. Old currency out of this available balance can be deposited in bank without any problem. Preferably it should be deposited in single shot subject to security issue.
Income Tax Assesses not maintaining books of accounts : If possible They should prepare their books of accounts of at least 8-10 years . Otherwise total their returned income of last 8-10 years and deduct there from any investment made , major expenditure , any asset purchased and annual household expenditure. This will give them a rough idea of their cash balance. Old currency out of this balance can be deposited in bank . Keep this working handy in case of any enquiry. Salaried persons generally fall in this category .
Neither Income Tax Assesses nor maintaining accounts : First time they are under stress. They cannot show their income more than the taxable limit of specific years. They can estimate their income less than taxable limit only and deduct there from the household expenditure, assets purchased, Investment made. The balance remaining can be deposited in bank . But will have to be justified with facts and figures.Daily wage earners, hawkers , lower rung employees can deposit cash below 2 lacs without any issue.
Housewives: This is most affected lot . Till now keep aside Taxmen even their family members were unaware of their cash holdings. They are shocked to the core. If their cash holding is justifiable as per their income tax returns , or drawings of their better halves it can be deposited in bank without any fear.
Agriculturists : The tax free lot . But they too should calculate their agriculture income of last 8-10 years and after deducting the expenditure deposit the old currency in bank. Income estimated should be justifiable by the land they are holding and crop they are cultivating.
General Suggestion : Anyone doing any adventurous planning should keep in mind the Indirect Tax Aspect also. Do not get panicked and loss your hard earned earnings. Utilise the time allotted to plan properly with the help from their financial consultants.
The decision to demonetization has been welcomed by one and all. It will also help in implementing the biggest indirect tax reform GST. But people expected a smoother efficient transition. Infrastructure should have been better placed. To start with only 1000 note should have been banned. Also there is no justifiable argument for introduction of Rs. 2000 note. First , now people have lost faith in the high denomination currency , secondly it will further generate the black money. Also who guarantees that Rs.2000 note can not be faked.
We hope the Indians come out of this crisis as early as possible and get back to their work.
Kyonki aur bhi gum hai Jamane Me !!!!!
(Author is a Practicing Chartered Accountant and can be reached at satishsardanagpur@gamail.com)
Read Other Articles of CA Satish Sarda
Author Bio
I AM A SENIOR CITIZEN, FEMALE AGE 65, I REGULARLY FILE MY RETURN, INCOME SOURCE IS MY FD INTEREST, I HAVE WITHDRAWN RS 3 LACS FROM MY
SAVINGS ACCOUNT FOR MY LIKELY गर्भाशय SURGICAL OPERATION AND SOME OR OTHER HOW IT HAS BEEN DELAYED AND CASH WAS WITH US , KEPT FOR SOME TIME, AND NOW MY OPERATION IS LIKELY TO SCHEDULE NEXT MONTH, AS, I WILL RUN SHORT OF MY BANK BALANCE, I HAVE ALREADY USED RS. 75,000 FOR MY AND MY HUSBANDS MEDICAL TREATMENTS, AND FOR HOUSE HOLD PURCHASED SOME RELIGIOUS TOUR IN LAST DIWALI,
THE SUM , OF BALANCE RS. 2.25 LACS IS WITH ME OF 500/-RS OLD CURRENCY, CAN I DEPOSIT THE SAME IN MY SAME SAVINGS ACCOUNT, AND WHETHER DO I HAVE TO KEEP SOME EXPLANATION WITH ME,
would appreciate reply on our e mail id.
Sundry Debtors who were not making payments for a very long time are coming forward and offering to clear their long outstanding dues but in demonetized currency.
What should a trader do ??
If he accepts the currency then he going against the law.
If he does not accept it then the money due remains unrecoverable and may become a bad debt which can lead to losses in his business.
Difficult decision?
What should a trader do??
If I am individual having income from teaching students at home. And I m filling continuously income tax return for last 2 year and making my statement of affairs as on 31.03.2016 which shows a cash Bal. Of around ₹ 1,50,000. Can I deposit old cash with new one earn more than 2,50,000 , . Becoz I have now around 3,20,000 with me. Reply with suitable possiblility happen.
IF a person has withdrawn amount from bank during the current financial year and you have not used it, you can easily redeposit the unused amount in the same bank account or any other bank a/c of yours.
eg you withdrew300,000 in August, you can easily deposit back below 250,000.
Better do not try it if you have unaccounted funds.
v good n useful information being provided here.
thanks to you mr.SatishSarda
Its really strange when FM / PM says unaccounted money, no body objects. All unaccounted money is not black, likewise all accounted money can not be WHITE, Wrongly accounted money turns in to WHITE which is known fact. It seems that the war is against the FUNDS lying with citizens only as of now and CORRUPTION has taken back seat. Whole RAILGADDI is running now and windows are opened for corruption.
in the article it is stated
What to do with the 100,500 notes ?
Is there any problem with 100 note?
Nicely Said……………….. but how can u say the income tax department not ask any details below Rs. 200000 even if earned in Past 8-10 Years.I know Arun ji Jately said on this aspect but how people rely is a critical matter…please tell me on this issue…
Any deposits old currency notes during the period of 9 th Nov. to 30 th Dec. to bank or later to RBI has to be justified with current year income shown in the income tax return, In case if deposits can not be justified with current year income , it is likely to be treated past years accumulated income included in this years return , and that case possibilities lies of opening last years assessment and treated as concealed income subject to the penalty proceeding under section 271(1) (c) and not under section 270 A as under reporting , because this is a case of over reporting not under reporting . this aspect to be carefully understood
yes sathish rightly said on its all “Modi-Fied” with many number of batters but all short of bowelers & general public is the one suffering a lots of lot
yes sathish rightly said on its all “Modi-Field” with many number of batters but all short of bowelers & general public is the one suffering a lots of lot