If your income is hard-earned and lawful, then brother you don't need bother. Of course, depositing 25 lakhs may invite Income Tax department's notice. However, a satisfactory statement can rescue you from the troublesome situation.
You are not alone having this kind of doubt. The major portion of middle-class people is indulging in converting/depositing their hard earned money in approved financial body like banks, post-offices. Yes, The Govt. and I.T department, itself aware that all income is not black money. As the deposited amount might be an outcome of saving of last few years.
As an average human being prefers to keep some portion of saved money with theme self. The reason may be vary. It might be not just saving. It may for the medical emergency or children's education / marriage or sometimes for purchasing own shelter. No one has right to ask you the reason for keeping that amount with yourself if you can prove the earning source is valid and fair in the eyes of law.
In other words, assuming your earned 25 lakh is part of last 5 years saving/overtime done by you. Also assuming you did not fill tax return for last 5 years. Let's check the tax exemption limit/slab for individual for last five years.
| Financial Year | Non-taxable income |
|---|
| 2015-16 | ₹ 2,50,000 |
| 2014-15 | ₹ 2,00,000 |
| 2013-14 | ₹ 2,00,000 |
| 2012-13 | ₹ 1,80,000 |
| 2011-12 | ₹ 1,60,000 |
| Total | ₹ 9,90,000 |
Which mean your income with valid proof of earning up to ₹ 9.9 lakhs may be exempt you to pay any tax/fine on that amount. Now, the doubt still not solved fully, as remaining amount ₹ 25 lakh - ₹ 9.9 lakh = ₹ 15.10 lakh is still needed further clarification for its source. If you prove this remaining amount is gained by non-taxable sources (consult with your CA) then you could be lucky.
But most time I.T. department not forgives easily. It will still ask to show a valid source of income. Or face fine up to 200% of total income tax.
AMOUNT DEPOSITED
(₹) | Tax Payable
(₹) | Penalty
(₹) | Total tax Paid
(₹) | Effective Tax Rate (%) |
|---|
| Up to 2.5 lakh | Nil | Nil | Nil | 0 |
| 5 lakh | 25,000 | 50,000 | 75,000 | 15% |
| 10 lakh | 1.25 lakh | 2.5 lakh | 3.75 lakh | 38.% |
| 15 lakh | 2.75 lakh | 5.5 lakh | 8.25 lakh | 55% |
| 20 lakh | 4.25 lakh | 8.5 lakh | 12.75 lakh | 64% |
| 30 lakh | 7.25 lakh | 14.5 lakh | 21.75 lakh | 73% |
| 50 lakh | 13.5 lakh | 27 lakh | 40.5 lakh | 81% |
| 1 crore | 28.25 lakh | 56.50 lakh | 84.75 lakh | 85% |
What are further Solution
- You can still deposit amount partly on the account of your family member. Like wife, father, mother, brother, sisters and children.
- Consult the CA or Tax consultant
- Pay the tax (short-term stress) and audacious for life (long-term benefit)
I have given this solution with my own opinion. Please remember, I'm not a professional consultant or possess any special knowledge on saving/managing the taxes. I just tried to give my best. So, it's always best practice to take consideration the opinions of experts personally. All the best.
