The operation to mop up old ₹500 and ₹1,000 notes will end on December 30, but the government will continue to monitor your bank accounts for large cash transactions well beyond that date.
“The stated purpose of demonetisation is a surgical strike on black money. This is part of the government’s on-going war against illegal money circulating in the economy,” said revenue secretary Hasmukh Adhia. “But we will not stop at this, there are several other proposals being considered to stub out black money.”
The basic principle of the action plan drawn up by finance ministry is to monitor all data relating to cash transactions and cash holdings of individuals, and for this purpose the government will keep a hawk’s eye on cash withdrawals and deposits.
The ₹2.5 lakh limit on cash deposits will be increased, but will be accompanied by silent scrutiny. “Strict monitoring of cash withdrawals and deposits at banks will be deterrent for large cash holding among people,” said a senior finance ministry functionary. He said there is no end-date after which such scrutiny would be tapered off. In effect, any cash transaction of that you make would be noted.
At present, Reserve Bank of India mandates all banks to maintain ‘suspicious transaction reports’ (STR) for all cash transactions above ₹10 lakh. Simply put, if an individual’s cash deposits or transactions in a bank total over ₹10 lakh in a financial a year, the data will be captured in the STR and shared with financial intelligence unit under the finance ministry.
“The limit of ₹10 lakh will now be reduced. Till December 30, all cash deposits over ₹2.5 lakh are being monitored, after that this limit will be increased but it will be lower than ₹10 lakh,” said a senior officer in the finance ministry, who did not wish to be named. Any mismatch of deposits with declared income will attract 30% tax and 200% penalty, with imprisonment being a possibility, the official said, adding a likely figure being discussed is ₹6 lakh per year.
The Union Budget of 2016 had mandated that the PAN would need to be quoted for jewellery purchases on cash above ₹2 lakh. To tighten the system further, sources in the government say that now, jewellers will be asked to disclose their stock holding and sales at regular intervals. “These are mainly jewellers who have been on the radar of the intelligence departments,” the official quoted earlier told HT.
The SIT has already proposed that PAN be mandatory for all cash transactions above ₹2 lakh.
“Real estate and gold are the two additional focus areas for the government after cash, to stamp out black money from the economy,” said Girish Vanvari, national head of tax for KPMG.
Prime Minister Narendra Modi said on Sunday that the government will next crackdown on benami property — that is, property that the buyer does not register in his own name, holding it in the seller’s name with a power-of-attorney that makes subsequent sale easier.
The property buyer saves on stamp duty, and the seller, who takes a big part of the payment in unaccounted and undeclared cash, saves by not paying tax.