Twenty one months after the launch of Operation Clean Money (OCM) to find out how much of the demonetised currency that returned to the banking system during the November 9-December 2016 window is tax-compliant, the government says it doesn’t have centralised information as yet on prosecutions launched against persons identified for suspicious cash deposits.
Twenty one months after the launch of Operation Clean Money (OCM) to find out how much of the demonetised currency that returned to the banking system during the November 9-December 2016 window is tax-compliant, the government says it doesn’t have centralised information as yet on prosecutions launched against persons identified for suspicious cash deposits. Responding to an RTI filing by FE, the I-T department, however, said 11.8 lakh of the 23.5 lakh persons identified for suspicious post-demonetisation deposits and sent notices to by it on the e-filing portal replied to the queries raised. The taxman also informed that of the 6 lakh PAN holders identified under demonetisation to have never filed returns, 1.5 lakh started filing returns subsequently.
This piece of RTI information is, however, significantly at variance with minister of state of finance Rajiv Pratap Shukla’s reply in the Rajya Sabha on August 7, 2018, in which he said that 2.1 lakh non-filers were identified among PAN holders and that these people subsequently paid self-assessment tax of Rs 6,410 crore.
So, even though the number of tax filers, the direct tax-GDP ratio and the direct tax buoyancy have risen a bit faster than the immediate-past trend after demonetisation and GST implementation, the effectiveness of the OCM mission in nailing the tax evaders is still rather unclear. OCM is a “dynamic and sustained mission”, the government said in a response to FE’s RTI query, adding that its status can’t be provided under the Income Tax Act.
The suspect post-demonetisation cash deposits are “subject to further verification for actions like monitoring of non-filers, scrutiny assessment, search and surveys etc. on the basis of risk involved assessed in terms of response(s) received, return of income filed and relevant third party information available with the department”, the department said.
As reported by FE earlier, even though first the demonetisation and later the GST have helped add pace to tax base expansion, the rate of growth in personal income tax collection hasn’t risen commensurately. (The number of individual taxpayers rose from 5.9 crore in FY16 to 7.8 crore in FY17 and, taking cue from available data, the figure could be close to 10 crore in FY18. Personal income tax revenue growth, however, rose from 8.5% in FY16 to 29% and then fell to 19% in FY18).
On the basis of information received during demonetisation, the government had earlier said, the department conducted searches leading to seizure of Rs 900 crore during the November 2016-March 2017 period, which included cash seizure of Rs 636 crore. During the same period, 8,239 surveys detected undisclosed income of Rs 6,745 crore, it had added.