Bank Account: When money suddenly comes into the bank account, people mostly get confused whether this amount will be taxed and what they should do immediately.

Some experts believe that there is no tax liability if money comes into the account by mistake, but if the account holder uses the money even after knowing that it is not his, then the biggest problem can be seen here.

Can tax be imposed on money received by mistake?

According to the Income Tax Law, tax is generally levied on only the income which is the taxpayer’s own or which is earned from salary, business, gift or any other legitimate sources. However, if an amount is wrongly credited due to a banking error, it will not be considered eligible income but the recipient has no legal claim on it.

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What does a tax partner say in such a situation?

So, in this case N.A. Giving further information, Gopal Bohra, tax partner of Shah Associates, said that tax is payable only and only when the money actually belongs to the taxpayer. That is, if a wrong credit has taken place and the taxpayer immediately informs the bank in writing, he cannot be held liable for tax.

Initially, the taxpayer himself will have to fully disclose the nature of this deposit to the tax authorities.

Know here the strict sections and penalties of the Income Tax Department

According to Section 69A of the Income Tax Act, 1961, if the taxpayer is unable to explain the source of money correctly, it is treated as ‘deemed income’ of that financial year. However, in such a situation, tax, surcharge and education cess at the rate of 60 percent is levied on this amount.

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What should be done immediately when the money comes immediately?

Kunal Savani, partner of Cyril Amarchand Mangaldas and other experts told that if money comes into your account, then do not try to spend or transfer that amount even by mistake.

On the other hand, immediately inform your bank in writing or through email and do not forget to check the record of Complaint Reference Number. Apart from this, if the sender is identified, then get the amount returned as soon as possible through proper banking channels.