Income Tax update
RBI decided to withdraw 2000 denomination (Part 1)
Will banks be required to report cash deposit transactions to the income tax department?

In pursuance of the “Clean Note Policy” of the Reserve Bank of India, it has been decided to withdraw the 2000 denomination banknotes from circulation.

However, to complete the exercise in a time-bound manner and to provide adequate time to the members of the public, all banks will provide deposit and/or exchange facility for 2000 banknotes until September 30, 2023.

As per the existing income tax provisions, for keeping a watch on the high-value transactions done by the taxpayers, the Income Tax Act has framed a concept to furnish a Statement of Financial Transactions (SFT).

As per SFT provisions, banks are required to report the following transactions :

– Deposits or withdrawals amounting to Rs 50 lakh or more from any number of current accounts of a person with the bank

– Deposit totalling Rs 10 lakh or more in bank accounts, other than current or time deposit accounts, of a person.

– Cash payment aggregating to INR 1 lakh or more in a year or Rs 10 lakh or more in any other mode of payment against any credit card bill which is issued to a customer in a year.