When the smoke clears after demonetisation, black money hoarders, who are left with no option but to turn in their unaccounted wealth into the banking system, are likely to face an extraordinary taxation regime. However, they would be given a chance to reduce the impact of damage inflicted.
According to sources, government is mulling amendments to the Income Tax Act to levy a 50 per cent tax on unaccounted bank deposits, provided the individuals declare the money. There would also be a four-year lock-in period for half of the remaining 50 per cent that escapes the tax.
However, those who still refuse to yield and declare their black money would face a 90 per cent tax if caught by the IT department. The government is planning to introduce these amendments very soon in Parliament, say sources. During its meeting on Thursday night, the Cabinet approved the amendment to impose a 50 per cent tax on deposits above a certain threshold. Meanwhile, sources in the Finance Ministry also claimed that there were no proposals to restrict the gold holding of individuals as claimed by certain reports. “There is no such proposal on restricting domestic gold holding,” the source said.
Demonetisation, which came into effect on November 8, has forced close to Rs 6 trillion to flow back into the banking system. However, it’s not clear how much of this constitutes unaccounted wealth. There were also widespread reports of laundering attempts through several unique methods. For instance, the government, in a written reply to the Lok Sabha, said the Jan Dhan accounts across the country have seen a total deposit of Rs 64,252 crore from inception till November 16. The scheme’s website also noted that the total deposit till November 9, one day after demonetisation, was Rs 45,637, meaning more than Rs 18 thousand crore flowed into these accounts in the next one week. The deposits further increased to Rs 21 thousand crore by November 24, according to Finance Ministry sources.
The sudden surge, according to Finance Ministry officials, indicates widespread attempts by hoarders to launder their black money by depositing it in the accounts of poor people, like their employees and domestic helpers. With respect to total deposits since inception, Uttar Pradesh topped the chart with total deposits crossing Rs 10,670 crore following by West Bengal (Rs 7,826 crore) and Rajasthan (Rs 5,345 crore).
Source : Indian Express dt.26.11.2016