Will Law Change To Tax Unexplained Cash ?

Will Law Change To Tax Unexplained Cash ?


The Prime Minister’s grim message that the state will check “records since independence and spare no one” has sparked fears that the law could be changed to tax unexplained cash.

Today, the law lacks the teeth to penalise those who fork out tax after parking a mountain of such cash as deposits with a bank.

Here, the rules of the game are simple: as long as such persons pay the maximum rate of income tax of about 36% (including surcharge and cess) they can keep the taxman at bay; even if they are unable to convince tax officials about the sudden loan or gift that is credited in their books of accounts, there is very little the tax office can do other than treating the amount as income that would be tax ed at the highest rate. It cannot slap a penalty.