Tax and penalty implications of cash deposits- Concern of RURAL PEOPLE

This query is : Open

RAM PA1 (Querist)
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16 November 2016 There is not much introduction required on new surgical strike on counterfeit currency and black money.however I wish to share the concern of village people who are now in a deep trouble with this surprise shock given by our government.All of us knows that the maximum proportion of people in rural areas are farmers who seasonally earned money on agricultural activities which is exempted in income tax.Even they earned profits on those activities they never wish to deposit it in their bank accounts on the fear or for some other reasons.what I assume is they feel insecurity on the ground of their borrows with the banks and greed of government policies.whatever it may be most of the farmers didn't deposit their years of hard earned money but placed in their houses.But with the surprise given by the government they are in dilemma as their cash bundles crossed above 2.5 lakhs and are now in forcible situation to deposit them in banks and could possibly attracted by our department of tax to explain the source!?!? I wonder how these people will explain on their income and also will the department can be convinced that this is a pile of all exempted incomes related to previous years!!? will they get exemption for the piled up amounts which were previously not in tax ambit.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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16 November 2016 No need to worry much for deposits up to 10 lacs if they can prove the source by showing the details of land holdings and crop harvested.

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Anand

Anand (Expert)
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16 November 2016 Seetharamanji, i fear that the taxman will not be so benevolent.
Also, if the farmers have accumulated these cash deposit over a few years, it will be hard to match with crop and acreage.
While i can understand that this route may be misused by unscrupulous elements, it is also very possible that there may be folks who are clean but will yet have to face the stick for really speaking, no fault of theirs.
Right now, we have to wait and watch. A slew of retrospective amendments may be in the offing most of which will be utilising "deeming fiction" in tenuous cases.

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RAM PA1

RAM PA1 (Querist)
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16 November 2016 what Anand sir provided is true in every act there are loopholes and the possibility of misuse

RAM PA1

RAM PA1 (Querist)
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16 November 2016 and in the given incident the taxman would force the farmers to pay penality and tax which is quite contradictory to the provision only income of previous year chargeable to tax not before !!! waiting to see how department will handle these kind of situations