Soon taxman to scan accounts older than 6 yrs to unearth black money
If the income tax department has reasons to believe that you are hiding undisclosed wealth, the taxman will scrutinise your transactions older than the six-year limitation. And Budget 2017 will amend the Income Tax Act to clarify this, say top sources in the tax department. The clarification is likely to include the provision that for illegitimate wealth the tax will levied on the current valuation.business Updated: Jan 06, 2017 10:54 IST
The government is looking to tighten the noose on black-money hoarders in the Union Budget. It may amend the Income Tax Act, allowing the taxman to scrutinise your transactions that are older than six years, said top sources in the tax department.
Already, the government has launched two schemes for voluntary disclosure of black money in 2016.
“The Income Tax Act will be changed in the Budget to remove ambiguity around the provision of opening old cases,” said the tax official seeking anonymity.
The clarification is likely to include the provision that tax will levied on the current valuation for illegitimate wealth.
“We can catch an offender with black money generated even 40 years or more ago,” said a senior tax official.
Following the demonetisation drive, the government had amended the I-T Act to introduce another voluntary tax disclosure scheme, and set the quantum of tax and penalty at 85%.
“If we catch illegitimate wealth, then irrespective of the year of its purchase, the tax will be on its present valuation,” said the source.
Critics say that taxing a transaction on its current valuation, even if it was made decades ago, is unfair.
“We need to amend the Income Tax Act to clearly state how long back the tax department can go to detect black money. To avoid litigations and bring clarity, this amendment is needed,” said Girish Vanvari, national leader of tax at KPMG India.
Unaccounted wealth worth ₹65,250 crore was disclosed during the four-month Income Disclosure Scheme 2016 that ended on September 30. This is expected to fetch the government just a little less than ₹30,000 crore in taxes.
The government is yet to release data on the black money declared under the second disclosure scheme called the Pradhan Mantri Garib Kalyan Yojana.