MUMBAI: The taxman may be within his rights to slap notices and demand 60% tax on all cash deposits made in banks since April this year as recent amendments to the Income Tax Act do not specify any threshold for scrutiny on cash deposits, say industry experts.The absence of a threshold in the amendment is contrary to assurances given by the Prime Minister and the revenue secretary that no inquiry or investigations would be initiated on those depositing up to Rs 2.5 lakh.“Small depositors putting Rs 2-4 lakh in their banks accounts after April 1may face scrutiny,” said senior chartered accountant Dilip Lakhani According to Sanjay Sanghvi , Tax Partner, Khaitan & Co, “As the proposed amendment reads, it appears that even small deposits of household savings could also attract tax at higher rate of 60% plus surcharge and penalty unless it is properly explained. A specific clarification from Government on this important aspect will be very helpful.”A depositor receiving a notice has to explain the source of cash. The changes in the law were brought about to tax unexplained cash deposits at higher rate.In order to address the concern that the Jan Dhan accounts have been misused to bring the unaccounted money of others in dubious manner, some other provisions should be considered, felt Dalsha Baxi, ED, Khaitan & Co. “One suggestion could be that those accounts which had near nil movement for the last 12 months, would be permitted to withdraw a maximum of 25% and the balance would go towards the Scheme,” she said.The government has given a chance (to come clean) to those who deposited explained cash during the year including deposits made in delegalised notes of Rs 500 and Rs 1,000.“The persons holding black money which is invested in movable and immovable properties cannot avail the benefit under the scheme. Considering the investment of 25% of amount will be locked in zero-interest bonds , it will increase the cost in the hands of the declarant from 50% to 56% (assuming the average post tax yield is 6%). The percentage of black money blocked in the currency notes of Rs 500 and Rs 1,000 is very low compared to the investments in movable and immovable property. Considering this, though the scheme may attract some individuals, the real purpose of the government to flush out black money will not be achieved,” said Lakhani.But more than the disclosure scheme what has drawn the attention of experts is to what extent tax officers would use their discretion. “The government had initially mentioned about a threshold of Rs 2.5 lakh which was not intended to be questioned; however, that cannot by itself be a blanket ‘exemption’ and has to be reasonable in the context of income and the drawings of the depositor,” said Ketan Dalal , senior tax partner at PwC.