New Delhi: Banks will have to notify the income tax department about “large cash deposits” of the Rs 2,000 notes, which have been withdrawn by the Reserve Bank of India (RBI), if they are above a threshold of Rs 10 lakh for term and savings deposits and Rs 50 lakh for current account deposits.
According to Livemint, the banks will have to notify tax authorities as part of the statement of financial transactions, which they are mandated to submit annually. The report says that “the exact currency denomination of the deposits does not need to be specified”.
The reporting system has been in place for years and is not a new provision taken in the wake of the move to recall the Rs 2,000 notes, an anonymous source told Livemint. The tax officials will comb through the data submitted by the banks to “detect tax evasion”, the report said.
“Everyone may keep some funds in cash for a rainy day. But, can there be a genuine reason for anyone to maintain large piles of cash, especially high-denomination notes, instead of trying to earn interest? That behaviour should merit an explanation, especially if the deposit is disproportionate to the income reported in the tax return. So, that question will be asked,” another source told the newspaper.
While RBI governor Shaktikanta Das had said that people who want to exchange notes need not provide any IDs, there have been reports that some banks have issued forms that seek an ID card. According to Mint, this has been a “measure of caution” that banks have taken for people “who make repeated attempts to exchange” Rs 2,000 notes.