❓Ask Duta: Effect on small businesses....

  |   India News

Readers have asked about how this scheme will affect small business people who collect and pay their money only in cash. Some readers have also asked about the effect on salaried class and whether salaried employees depositing cash will be under scrutiny

With respect to affecting small business people: yes there is a short-term impact with respect to small businesses, especially rural sector, having to deposit their money on hand and get new notes. However this should be a short-term inconvenience during the "transition phase"; the impact should be minimal long-term. Deposits themselves, if genuinely accounted for, should not cause tax implication issues. With the issue of new ₹500, ₹2000 and the expected ₹1000 notes, it should be business as usual.

With respect to salaried class, there is no bar on them depositing any amounts as long as such amounts are accounted for (ie in their IT return) and they have a source to explain and substantiate the same. And while the Govt. has said they won't scrutinize deposits < ₹2.5 lakhs it is always important to have proper source and explanation for cash deposited irrespective of limits. Please take further specific advice from a tax professional❗