PMO asks Income-Tax department to crack down on black money in banks

Today's Economic Times, carries the following news article. This is an obvious reaction from the Government, which is facing flak from various quarters especially the opposition, regarding the demonetization exercise that came at a very high cost and pain to the public, only to reveal based on the latest RBI Report that 99% of the notes were returned to the RBI, contrary to the expectation of the ruling party that 2-3 lakh crores would not be returned back by black money holders. This primarily indicates that tax dodgers have devised various ingenious ways of converting black money to white or at least taken the risk of answering for their unaccounted money, when facing tax inquiry from authorities CBDT/CBEC, based on data on deposits made during the demonetization period that is now available in the banking system. Special focus is likely to be on jewellers, Jan Dhan account holders, "agriculturists" and others whose deposits showed an abnormal spike, which may not be substantiated by data provided by them in tax returns filed. It is on this basis that 18 lakh individuals were issued tax notices by Income Tax Department of which around 9 lakhs were found "doubtful" or suspicious based on replies provided, or those who did not respond to the tax notices. This news indicates that the Government is intent on tightening the screws on tax defaulters in the days ahead and take the process to its logical conclusion as many things are now visible and under its control, contrary to the issue of bringing back illicit money stashed abroad, which is far more tedious as its depends on the cooperation of foreign governments to act on and provide necessary information. Read the article below to know the priorities that the Government seems to have set in widening the tax base and bring defaulters to book..........

Source ; Adrija Chatterjee , ET Now| dated Sep 05, 2017, 07.01 PM IST

Crack down on all black money deposited in banks during the demonetisation period. This according to a high ranking government official is the clear mandate given to the income tax department by the Prime Minister's Office, and this instruction was issued within days of the RBI revealing that 99% of the demonetised Rs 500 and Rs 1000 currency bills had returned to the banking system.

Sources say Prime Minister Narendra Modi asked the tax department to prioritise the unearthing of black money in a speech he made to the Finance Ministry's Revenue Department, CBDT and CBEC in a closed door event on Sep 1 and 2. Modi was speaking at the Tax Department's annual event, Rajaswa Gyan Sangam. 

The income tax department according to sources will now train its guns on "suspicious" and "unusual deposits" made post the announcement of demonetisation on Nov 8, 2016. It will match such deposits with previous income tax returns to establish unusual activity and also question the source of funds. 

Deposits in the Jan Dhan accounts, that had peaked to Rs 64,564 cr during demonetisation are also likely to be under the scanner. 

On the other hand, when it comes to the recently rolled-out GST, the tax department has been advised by the Prime Minister's Office to not pull up those who have become GST compliant despite never having filed an IT return. 

"The government wants to go easy on those trying to be GST compliant, atleast for the current financial year, even if they have not filed their income tax returns," the official told ET Now. 

However, the tax department will not spare all those individuals and companies tat have failed to register with the GST Network. 

"The message is loud and clear. Do not go after those that are trying to be tax compliant even if for the first time. Instead, focus on those that are refusing to be GST compiant," said an official to ET Now.