Income Tax News: Depositing Cash Without Disclosing THIS Can Result in Hefty Fine, May Have to Pay Over 50% Tax

Income Tax News: In recent times, cash deposits in banks have become a focal point of scrutiny by the income tax department. While digital transactions have made life easier for many, there are still plenty of people who deal with cash. With changes in income tax rules, depositing cash without disclosing its source could lead to serious consequences, including a substantial tax burden.

The Income Tax Rules and Cash Deposit

The Indian government has made several updates to the income tax rules over the years, especially as it seeks to curb black money and money laundering. Now, the latest move involves tightening regulations around cash deposits. If you're planning to deposit a large sum of cash into your bank account, be aware that failing to disclose its source could result in heavy penalties.

Why the Focus on Source Disclosure?

Many people, especially those who deal in cash, have been depositing large sums without clarifying where the money came from. The income tax department has zero tolerance for deposits that appear unaccounted for, as they are often linked to illicit activities like money laundering or tax evasion. To discourage such practices, the government has introduced strict measures, including a potential 50% or even higher tax on undisclosed cash deposits.

How Much Cash Can You Deposit Without Penalty?

The threshold for mandatory source disclosure is Rs. 10 lakh. If you deposit Rs. 10 lakh or more in a bank account, the bank will ask for clarification regarding the origin of the money. For current account holders, who often deal with large transactions for business purposes, the limit is set at Rs. 50 lakh, offering a bit more leeway.

What Happens If You Don’t Disclose the Source?

If you deposit cash but fail to reveal its source, the income tax department may issue a notice to investigate further. If the department believes that the cash is linked to money laundering or illegal financial activities, you could be slapped with a hefty fine. The tax liability could easily soar to 60%, including penalties and interest, which would significantly reduce the amount of money you deposited.