5 Ways to Stay Away from Black Money
When the centre revealed the names of Indians with bank accounts in Switzerland, a customary call to a chartered accountant made sense. The question was how to make sure that a person be financially healthy and disciplined, without having back-of-the-mind worries of the man knocking on the door. Following are some steps toward a corruption-devoid, black money-free bank account. These are only general information and may vary on a case-to-case basis.
1. The first deterrence is the Knowledge. One should aware of at least the primary tax laws and rules of country. There’s no harm in staying out of harm, or in defining what is declared and undeclared income. A basic knowledge of Income Tax Act and Income Tax Rules can save you a lot of trouble.
2. Always consult a chartered accountant, an approved tax return prepares or an income tax advocate before you file income tax returns. By this simple way a taxpayer need not be afraid of scrutiny of bank accounts and also cover all sources of income, at one go.
3. Form 16 itself is not the sole embodiment of tax returns or the transactions you have made in a financial year. Form 16 provides details of the tax deducted by your employer from your salary and is useful in filing your income tax return, but it does not provide details of other sources of income besides your salary.
4. A tax payer does not declare cash income many times, but pays credit card bills, mutual funds, telephone bills, tuition, electricity bill, instalments with unaccounted money thinking it will not be tracked. One must be able to justify all premiums, credit card bills and instalments, whether of home loan or insurance. This cash should be declared in the income tax(IT) returns.
5. Do not accept unaccounted-for or stray cheques or cash from friends, relatives and acquaintances or indulge in transactions, the nature of which is unknown or is not clear or is not documented. If your friends or acquaintances offer you cash in lieu of a cheque in return from you, remember that even this act of helpfulness on your part can land you in trouble unless properly documented or disclosed. Any loan whether accepted or given or repaid must be in cheques. As per Income Tax rules, one cannot repay or accept a loan of more than 20,000 Rs in cash.