The Rs1,000 notes that were banned as part of black money crackdown, according to reports, will return with new security features.
Finance Secretary T K Pande was quoted by NDTV, on 10 November, saying that new Rs1,000 notes will return with new security features.
On 8 November, Prime Minister Narendra Modi had announced while addressing the nation that the Rs500 and Rs1,000 notes would no longer be considered as legal tenders to tackle the black money and fake currency in the country. He had said that around 80% of the fake currency in India is in denomination of Rs500 and Rs1,000.
After PM Modi address, the government had announced that cash above Rs. 2.5 lakh deposited in banks following the scrapping of Rs. 500 and Rs. 1,000 notes could attract a tax and a 200% penalty in case it is disproportionate to the account owner's income, the government has said.
The banks have been asked to keep the details of PAN card of people depositing such large amounts over the 50-day window till 30 December.
Similarly, jewellers have been told to keep PAN details of people buying jewellery on cash. Action will be taken against them in case of non-compliance.
The government's move is the sequel to the scrapping of high denomination notes, meant to flush out black money and counterfeit currency.
"We will be getting reports of all cash deposited during the period of 10 November to 30 December, 2016, above a threshold of Rs. 2.5 lakh in every account," Revenue Secretary Hashmukh Adhia said.
The Income Tax department, he said, will match this with the income tax returns filed by the depositors. In case of a mismatch, "suitable action may follow," Mr Adhia said. It would be treated as a case of tax evasion.
In such a scenario, the tax amount plus a penalty of 200 per cent of the tax payable would be levied under the relevant sections of the Income Tax Act.
Mr Adhia said small businessmen, housewives, artisans and workers who had cash lying as savings at home, should not be worried about any tax department scrutiny.
Deposits up to Rs. 1.5 or Rs. 2 lakh would be below taxable income. "There will be no harassment by the Income Tax Department for such small deposits made," he said.
Regarding the purchase of jewellery, he said, "We are issuing instructions to the field authorities to check with all the jewellers to ensure this requirement is not compromised."
When cash deposits of the jewellers are scrutinised against sales, "it will also be checked whether they have taken the PAN number of the buyer or not," he added.
-with PTI inputs