New Delhi, December 10: Post demonetisation of Rs 500 and Rs 1000 currency notes, more than 75 % of banned currency has already parked into bank accounts wailing the claims of Central government that had expected lesser deposits into the banking segment.
As a result, Finance Ministry has repeatedly said that, I-T department will look at all “unusual” and “suspicious” deposits made into accounts, even if they are less than Rs 2,50,000.
Recently Finance Minister Arun Jaitely said: Merely depositing money in the bank doesn’t mean that it changes colour from black to white. Its tax liability would still remain because what is unexplained would still remain taxable.
That precisely means, there would be at least 40 crore bank accounts to be reviewed by Income tax department, with the maximum of Jandhan accounts to be scrutinized after the deadline of December 30.
With rising cases of income irregularities beyond the Income-tax Act, CBDT last week meekly said that it had referred investigation cases to Enforcement Directorate and Central Bureau of Investigation (CBI) as a necessity measure to control money laundering and tax evasion. The swift investigations are being rolled out by IT department to check conversion of black money into white amid noteban emergency.
More than 450 income tax raids have been conducted across the nation post note ban announced by Prime Minister Narendra Modi on November 8.
So there is a definite possibility of the taxman getting to an enormous discretionary powers post-demonetisation.
Several officials from government secretly admitted the fear for Inspector raj cropping up post demonetisation.
Pounding cases for investigation would overburden the Income-Tax department which is already facing Human resource scarce and even Prime Minister Narendra Modi’s agenda for “minimum government, maximum governance” does not mean that the looming fear for inspector raj for government as well as India Inc would not exist.
Starting from January 1, the Income-Tax department in close coordination with the Enforcement Directorate would kick off a massive assessment exercise for checking money laundering during the 50 day of demonetisation.
An industry insider said although the intention of demonetisation is very good, but the outcome could be negative. Inspector raj, harassment of taxpayers — these are key concerns.
Another government official revealed that I-T department is already busy with time-barring scrutiny assessment for the financial year 2013-14.
“Normally, we get time till March 31. This year, it has been advanced to December 31. After this, our attention will turn to big data analysis of moneys deposited during the demonetisation drive. Incidentally, this coincides more or less with the end of the demonetisation scheme (December 30). We will start analysing data after December 31,” said the official.
The IT department has huge constraints both in terms of resources and time.
Experts on direct taxes told Indian express: The size is so large. So, there is a need to work out rational solutions. It has to be rule-based and non-discretionary. There should be some sampling basis… Otherwise, the return on investment in such investigation may be negative.
“Launderers are trying to beat the system. We know how to trace them. We will trail them and catch them. Not it is easier for us,” an I-T official said. “We will do our homework. We have a risk management system and will follow standard protocols. We will share information with the Enforcement Directorate on a need-to basis. The ED can make arrests too,” the official said.
In face of an arrest, an IT official does possess too much of liberty to use inspector raj and fear looms high for the insdustry and small shop keepers. An IT official agreed and said some genuine taxpayers may face the heat. But that is a price to pay for building a civilised nation of honest taxpayers while adding that the department did not need extra powers for the exercise.
Amid all the chaos there is also a likelihood that investment in kitties, gold and jewellery by housewives and middle-income households who accumulate small portions of wealth may suffer in the whole exercise. Government should certainly disclose simple disclosure guidelines so that there is no harassment from the tax officials.