Tax calculation for black money – 200% Penalty

Tax calculation for black money – Demonetization of Rs 500 and Rs 1000 notes is one of the best decisions made by Modi government. This decision has created havoc. Everyone is rushing towards bank to exchange or deposit old high denomination notes.

If you have a black money and if you are planning deposit black money, be ready to pay 200% penalty. The news of 200% penalty is shocking. After hearing this news many people are worried that how much tax they need to pay actually if they deposit black money in the account. In order to help them here is Tax Calculation for black money or unaccounted money.

tax calculation black money

Tax calculation for black money – 200% Penalty

Case 1 – Cash Deposit up to 2.5 Lakh

  • No need to worry if you deposit Cash up to 2.5 Lakh in your account. 2.5 Lakh is income tax limit and people will not be questioned or disturbed if they deposit cash up to Income tax limit (2.5 Lakh) in their account. This condition is applicable if you have not filed income tax return till date.
  • If you are already filing income tax return the additional amount deposited in your account may be questionable.

Case 2 – Cash Deposit up to 5 Lakh

  • If you are planning to deposit anything above 2.5 Lakh in your account, you need to pay tax. Any amount deposited above 2.5 Lakh will be reported directly to income tax department. The deposited amount will be compared with Income Tax return. If any discrepancy found you need to pay 200% penalty as per section 270 A.

Tax Amount – Rs 75,000

First 2.5 Lakh – Exception

  • A = Normal Tax = 10% of 2.5 Lakh = Rs 25,000
  • B= 200% Penalty on Tax = Rs 50,000
  • Total Tax = A+B = Rs 75,000

Case 3 – Cash Deposit of 10 Lakh

  • Any deposit above 2.5 Lakh will be scrutinize by income tax department. In case of any ambiguity 200% penalty on tax is applicable. Tax calculation is given below.

Tax Amount – Rs 3,75,000

First 2.5 Lakh – Exception

  • A = Normal Tax = 10% of 2.5 Lakh + 20% of 5 Lakh = Rs 1,25,000
  • B= 200% Penalty on Tax = Rs 2,50,000
  • Total Tax = A+B = Rs 3,75,000

Case 4 – Cash Deposit of 20 Lakh

If you have excessive cash up to 20 Lakh and you are planning to deposit in your account. Get ready to pay 200% penalty. Tax calculation is given below.

Tax Amount – Rs. 12,75,000

First 2.5 Lakh – Exception

  • A = Normal Tax = 10% of 2.5 Lakh + 20% of 5 Lakh + 30% of 10 Lac = Rs 4,25,000
  • B= 200% Penalty on Tax = Rs 8,50,000
  • Total Tax = A+B = Rs 12,75,000

Case 5 – Cash Deposit of 50 Lakh

If you deposit 50 Lakhs black money in your account, you need to pay Rs.39,75,000 as tax. Tax calculation is given below.

Tax Amount – Rs. 39,75,000

First 2.5 Lakh – Exception

  • A = Normal Tax = 10% of 2.5 Lakh + 20% of 5 Lakh + 30% of 40 Lac = Rs 13,25,000
  • B= 200% Penalty on Tax = Rs 26,50,000
  • Total Tax = A+B = Rs 39,75,000

Note – Above calculation is based on 200% penalty which government has announced.

How Income Tax Department Know Cash Deposit During this period?

You must be thinking that How income tax department will know about cash deposit during this period. As per RBI circular every bank has to submit a report to RBI at EOD about amount deposited or exchanged.

The details of cash deposited in your accounts can also be obtained from Income tax e-filing website. In order to know all cash deposit in your account login to e-filing portal and click on “Compliance” menu. You will find a tab called as “Accounts with Cash Transactions”.

account with cash transactions

Hope I was able to address your confusion about tax calculation on black money. If you have any query about tax calculation do post it in the comment section.

Let’s not panic about 200% penalty news. Deposit your black money and pay tax honestly. It’s time to help a nation to fight against black money and terrorism.

Let’s stay together and we will definitely win this battle.

Jai Hind

Article by Raviraj

Hi, I am Raviraj. I am passionate about money matters and finance. I have 10 years of rich experience in the field of financial planning, Investments & Insurance. I have written 850+ article on this blog. If you like my efforts kindly subscribe to this blog and also let your friends know about this website by sharing.

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9 Comments

  1. Ritesh Sharma says:

    Dear Mr. Raviraj, Thanks for wonderful article for clear the doubts on black money. I am a salaried person earning 12 lpa. I’m regular paying the tax on same also. I have given the loan in installment to my relative through on-line transaction,and now fortunately I have received 5 lacs from my relatives in liquid cash for repayment loan in cash. If I deposit it in my account. Is there will be tax calculated on the amount??

    • Dear Ritesh,

      If you have officially shown this money using online transaction it is white money.You need not to worry in this case.You can show this as a loan repayment.No Tax liabilities. However, your relative may face query in case transaction is traced.

  2. Muhammad Rizwanullah.S says:

    Respected sir,
    I am applying for a student visa for Italy for my masters degree. In order to apply that I have to show them a bank statement of 8lakhs in my account. If I deposit 8lakh rupees will I also be scrutinized. Please suggest something that might help.

  3. Vijay Kangra says:

    I am a salaried person earning 8 lpa. I have received 6 lacs from my relatives in liquid cash. If I deposit it in my account. How will the tax be calculated on the amount. How will the 200% penalty affect me

  4. sushil says:

    i want deposit cash which i have shown in my previous year
    IT return ,can i deposit many times in small amount.

  5. Anil says:

    Black money follower very simple packing 2000.note

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