With a view to curb the black money creation, the CBDT (The Central Board of Direct Taxes) has brought in new guidelines for receiving cash and high value money by Individuals, above the specified threshold. This needs to be reports by banks and companies who issue shares or bonds, to the IT authorities. This is to be brought in line w.e.f 1st April 2016.
Salient Features of new System:
- The newly introduced form 61A is meant to report the Cash Receipts, Shares or Mutual funds Purchased, Transactions in Immoveable property, Term Deposits, Foreign Currency sales, through online.
- Though there is a provision for compulsorily mentioning the PAN number in such transactions, the above procedure is said to be an additional step in keeping an additional track for follow up and curb black money in circulation which will be applicable for high value transactions.
- Also, it is clarified that any transaction in Foreign currency, which relate to Foreign exchange card transaction, or for issue of travelers cheque exceeding INR 10 lakhs, will have to be reported on line in Form 61 which will be stored in a separate server and duly monitored by the investigating authorities.
- Also, the registrars are advised to furnish the details of Purchase and sale of immoveable properties of value more than INR 30 lakhs to the Income tax department. Professional persons will have to now advice the Income tax department, if the cash payment is more than INR 2 lakhs if any sale value exceeds INR 2 lakhs. If cash remittance of value totaling above INR 10 lakhs is noticed in a Financial Year in any account of a person (either a single or multiple accounts), should be reported to the IT authorities.
- Though the same rule is made applicable to Banks’ Term Deposits, the rule exempts the existing Term Deposits with banks. Also, this rule will cover the amounts deposited and withdrawn in a Post office account. Reporting by banks, on card payments in a FY totaling more than INR one lakh in cash or INR 10 lakhs through other modes, requires compulsory reporting.
- If a bank draft or an RBI issued pre paid instrument for an amount INR 10 lakhs or more, is obtained through Cash mode in a FY, reporting is now made compulsory. Similarly, if cash deposit or withdrawal is made in an account in a Financial Year exceeds, INR 50laksh, reporting of such transactions to IT authorities is now mandatory.
- Bonds, debentures, shares or mutual funds of value INR 10lakhs or more obtained by a person in a FY from a Company also requires reporting to IT authorities now.
- If a person buys shares in the open market which aggregates to INR 10 lakhs or more in a FY vis a vis companies buying their own securities also require reporting.
Though this is a new strategy brought in by Mr. Arun Jaitely the FM to curb black money in circulation, readers feel, that while large amount of money lying at Swiss Banks, and other places, have gone un noticed, without any positive action being initiated, these measures would only prove to be small fish in a bond, ending up in a harassment to small and retail investors.