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Wednesday, Nov 13, 2019

Demonetisation: Rs 10K cr undisclosed income detected, plans 60,000 tax notices

Under Operation Clean Money, more than 60,000 persons, including 1,300 high risk persons, have been identified for investigation into claims of excessive cash sales during the demonetisation period.

business Updated: May 08, 2017 07:13 IST
Mahua Venkatesh and Raj Kumar Ray
Mahua Venkatesh and Raj Kumar Ray
Hindustan Times, New Delhi
(HT file photo)

After the demonetisation exercise threw up less than ₹10,000 crore in black money, the Narendra Modi government is set to tighten the noose on tax evaders and ask over 60,000 people to explain the sources of their income.

The November 8 decision to scrap banknotes of ₹500- and ₹1,000-denomination was aimed at cornering black-money hoarders into depositing or exchanging old notes at banks. The amount so raised would later be compared with their declared income, and taxes and penalties could be levied.

Operation Clean Money was launched on January 31 to detect slush funds deposited with banks and used for high-value purchases such as property and gold.

Government officials and economists had expected at least ₹1.5-2 lakh crore of “wealth destruction” as black money either got destroyed or deposited in banks. A major chunk of the black money amount deposited in banks is supposed to go to the coffers of the government as taxes, and rest get locked in the new bank deposit scheme under the Pradhan Mantri Garib Kalyan Yojana (PMGKY).

However, many citizens had not declared their unaccounted income until March 31, the last date to comply with the PMGKY, also called the second round of the Income Disclosure Scheme (IDS-II).

“Under Operation Clean Money, more than 60,000 persons, including 1,300 high risk persons, have been identified for investigation into claims of excessive cash sales during the demonetisation period,” the finance ministry said on Friday, citing data until February.

Taxmen will now intensify searches and seizures against those people whose bank deposit do not match their income, sources at the Central Board of Direct Taxes told Hindustan Times.

“More than 2,362 search, seizure and survey actions have been conducted by the Income Tax Department (ITD) during 9th November 2016 to February 28, 2017, leading to seizure of valuables worth more than ₹818 crore, which includes cash of Rs 622 crore, and detection of undisclosed income of more than ₹9,334 crore,” the finance ministry said.

The Modi government rode to power three years ago partly on a promise to fight corruption and tax evasion. The government has since has tightened the noose around tax dodgers with schemes such as the enactment of a Black Money (Undisclosed Foreign Income and Assets) Act to unearth unaccounted for cash stashed abroad, launched a Income Disclosure Scheme (IDS-I) and scrapped ₹500 and ₹1,000 notes. It also gave tax evaders a chance to come clean under IDS-II.

More than 400 cases have been referred by ITD to the Enforcement Directorate (ED) and the Central Bureau of Investigation (CBI). Surveys have been conducted in more than 3400 cases by Assessment Units.

“People who have indulged in high value purchases after demonetisation including land, property and jewellery, but have not disclosed the source of income are under scanner” an official said requesting anonymity.

Those who have deposited sizeable amounts after the demonetisation announcement but have not disclosed the source of funds under the PMGKY are also under the scanner of the tax sleuths.

More than 6,000 transactions of high value property purchase and 6,600 cases of outward remittances shall be investigated. Cases where no response is received will also be looked into.

The government says its action is bearing fruit with a 21.7 % increase in the filing of income tax returns for 2016-17.

Gross income tax collections grew 16% in 2016-17, the highest in the last five years. Net tax collections after handing out refunds were up by 14%, which is fastest in last three years. Personal income tax receipts were up by 18%, with regular tax assessment rising 25% and self-assessment surging 22%.