Now, transactions older than 6 years in govt cross hairs in war on black money
An tax evasion offender, depending on the amount or assets seized, could end up paying a tax as high as 75% and could also be jailed.business Updated: Oct 15, 2016 11:29 IST
The crackdown on black money is not over.
With the scheme for voluntary disclosure of unaccounted for wealth now closed, tax officials have launched a drive to unearth hidden incomes and are looking at transactions carried out beyond a six-year ceiling under existing rules, sources said.
“The tax department can scan transactions older than six years by invoking clause 197C of the Finance Act, 2016. This clause was introduced to crack down on black money,” said a finance ministry official, who did not wish to be named.
An offender, depending on the amount or assets seized, could end up paying a tax as high as 75% and could also be jailed, sources said.
Officials are scrutinising the records of those who they believe did not come clean and are hiding undisclosed wealth.
While the I-T law allows a check of income of the last six years, the Finance Act, under which the disclosure scheme was brought in, and foreign undisclosed assets act allow authorities to inspect records older than six years.
In the run-up to the Lok Sabha elections, the BJP had promised a war on black money. The latest move comes ahead of elections in five states.
Within months of coming to power, the Modi government, on the orders of the Supreme Court, set up a special investigation team to probe ill-gotten wealth. The SIT can examine transactions that are 14 years old.
I-T notices are already being sent.
A few weeks ago, Sushmita Biswas was asked about the sale of her ancestral house in a posh locality of Kolkata. Biswas got in touch with chartered accountants and lawyers, who told her she had no reason to worry as the house was sold in 2001.
But, they were wrong.
“We can catch an offender with black money generated even 40 years back or even further ago,” a tax official said.
Ambiguity had arisen as the finance act gave tax officials the power to go beyond six years, Manoj Fadnis, former president, Institute of Chartered Accountants of India, said.
“…but, the I-T act allows them to open cases only for the current year and go back six years...to avoid litigations and bring in clarity, it is important to amend the IT act too,” Fadnis said.
The confusion would end with the next budget when law would be changed to end ambiguity surrounding old cases, the tax official said.
Critics dub the move as unfair, saying tax has to be paid on the current valuation of a transaction even if made decades back.
“Black money does not become white if it is not discovered by the tax department for a certain period of time. Therefore, discovery of undisclosed income from a past period will lead to action under the income tax laws as applicable today,” said Manoj Kumar, a legal expert and managing partner, Hammurabi and Solomon.
A disclosure of Rs 65,250 crore was made during the four-month black money disclosure scheme that ended September 30. It will earn the government around Rs 30,000 crore in taxes.
First Published: Oct 15, 2016 00:20 IST