Come December 30th and all old Rs 500 and Rs 1,000 notes will be of no use to their hoarders. Banks are witnessing an unusual rush for deposits, withdrawals and exchanges alike. While most businesses are suffering due to demonetisation, Chartered accountants are in high demand.
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"We have been getting all sorts of queries. From how to handle small amounts like household saving and gifted cash to how to convert ill-gotten money into legal sources. Many within the CA circle have taken a moral stand against helping people legalise their black money", said Narasimhan, sought after CA in Bengaluru.
The taxman has turned into many people's nightmare over demonetisation. The biggest fear is the 200% penalty on tax evasion. "Most people think that if a deposit over Rs 2.5 lakh is made, IT department will slap a penalty of 200% tax but that is definietly not the case. There are different tax slabs depending on the amount. The higher the deposit, the higher penalty", he added.
Chartered accountants have been in great demand since the demonetisation scheme was announced. Not just individual accountants but physical firms and even online tax filing services have been receiving multiple queries. Most queries are about simple savings by home makers, money earned through odd jobs, cash received as gifts, cash slated for personal expenditure which are close to Rs 2.5 lakhs. Most accountants suggest that this money be deposited to banks and the account holder won't have to worry.
There are however, queries on how to convert ill-gotten money into legal tender by means of purchase or investment. "Although we haven't encouraged such people, we have received queries on how to handle large sums of money. Money that the owners do not want to declare the source of. Our suggestion has been for it to be deposited in the bank and pay tax+penalty", he said
In a bid to absolve themselves from misreported sources of income, accountants say, people may attempt to utilise the rest of the financial year. "Most people with hoards of cash are looking pay advance tax in December or March. It may save them some penalty but will spike their returns for next financial year. Whatever they pay the advance tax for will reflect in next year's return", said a CA.