Tax experts argue that the new Section 270A applies to reported income, whereas a large cash deposit representing a surge in income this fiscal, that is as-yet-unreported-income, would not be covered by this section. As long as the surge can be supported with necessary documentation, the income could be offered to tax in this fiscal and at most be taxed at the highest slab rate of approximately 34 percent.

But Kanabar disagrees. He believes that the Finance Ministry may consider amending the section in the Budget Session of Parliament, to make it applicable to the current fiscal as well. Such a change, according to him, would not be retroactive as it would take place in the same fiscal – after all, this time the Budget Session will commence in February 2017.

If Kanabar’s expectation comes to pass, citizens who cannot adequately explain the high-value cash deposit in their bank accounts will pay three times the assessed tax (tax plus a penalty of 200 percent of the tax payable) and may even have to spend some time in jail.