Determined to take the war against black money and tax evasion to its logical end, Prime Minister Narendra Modi on Tuesday asked tax officials to implement the so-called Operation Clean Money (OCM) with gusto. He also hinted at reinforcing the Benami Transactions (Prohibition) Amendment Act, 2016, to give enforcement agencies more teeth. Reviewing several issues related to taxation — including the planned July 1 roll-out of the goods and services tax — with senior revenue department officials, Modi also urged the income-tax department to implement e-assessment soon. Currently, the paperless assessment is limited to pilot projects being run in seven Metro cities namely Delhi, Mumbai, Ahmedabad, Bengaluru, Chennai, Hyderabad and Kolkata.
The new benami property law provides for rigorous imprisonment of up to seven years, and a fine which may extend to 25% of the fair market value of such property. It also allows the government to confiscate benani deposits. However, analysts have noted that the law as such hasn’t been a major deterrent to those holding assets in others’ names and suggested that certain loopholes in the law needed to be plugged.
The I-T department has so far registered about 240 cases and attached assets worth Rs 55 crore nationwide under the new benami property law. But this is obviously a tip of the iceberg. Show cause notices for attachment of benami property have been issued in 140 cases where benami assets worth Rs 200 crore are involved, the income tax department had said in March.
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Under the second phase of OCM, taxmen are zeroing in on more than 60,000 people — including 1,300 high-risk ones — for investigations and are subjecting more than 6,000 high-value property purchases and 6,600 cases of outward remittances to detailed scrutiny.
As part of the first phase of the operation, launched on January 31 this year, the department had sent online queries to 17.92 lakh persons, of which 9.46 lakh responded. Several shell companies engaged in laundering of money had also been detected.
The hardening of the post-demonetisation crackdown comes after the Pradhan Mantri Garib Kalyan Yojana, also known as the Income Disclosure Scheme-II (IDS-II) — the window provided by the government for people to deposit their unaccounted cash after the note ban to come clean after paying a hefty fine — has come a cropper. Although the government hasn’t yet released the tax collections from IDS-II, various reports have pegged it in the range of just Rs 3,000-4,000 crore, belying expectations of a massive mop-up through the scheme running into over Rs 1 lakh crore. At Tuesday’s meeting, the prime minister also stressed the need for broadening the tax base but he refrained from commenting on the current debate on bringing the rich farmers under tax net.