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Bank deposits since Nov 8 may attract 60% income tax

The Union Cabinet late on Thursday cleared a proposal to amend the Income Tax (I-T) Act to levy close to 60% deduction on unaccounted deposits in banks above a threshold, reports say.

The decision was taken in view of a surge in deposits ? about Rs. 20,000 crore, according to some reports ? in Jan Dhan accounts since November 8, when the central government announced the demonetisation of Rs 500 and Rs 1,000 currency notes.

Interestingly, the amount deposited during this period turns out to be almost 50% of the total deposits in these accounts in the two years since their launch. The move is also expected to prevent black money holders from circumventing existing I-T Act provisions.

Earlier in the day, the government extended till December 15 the facility of using old Rs 500 notes in public utilities and included more services such as mobile recharge but stopped the over-the-counter exchange of defunct currencies and use of Rs 1,000 notes.

An official release said, "Considering that the Ministry of Road Transport and Highways have continued the toll free arrangement at the toll plazas up to December 2, it has been decided that toll payment at these toll plazas may be made through old Rs 500 notes from December 3 to December 15."

Foreign citizens will now be allowed to exchange foreign currency up to Rs 5,000 per week. Necessary entry to this effect will be made in their passports, it said.