With the stunning election victory in Uttar Pradesh indicating validation of BJP-led government’s demonetisation move, Prime Minister Narendra Modi is expected to intensify the drive to push black money hoarders to declare funds under income disclosure scheme, says a report. As per Bank of America Merrill Lynch (BofA-ML), the Centre will step up the drive against black money “through make-an-example raids and seizures” and the income disclosure scheme II (IDS II) is expected to net Rs 1,000 billion — almost double of what is budgeted.
“We expect PM Modi to intensify the drive to push black money hoarders to declare under the IDS II, ending March 31, after his party, the BJP, swept the critical Uttar Pradesh (UP) polls last week,” BofA-ML said.
“We see this as a reconfirmation of political stability, with the UP victory likely improving the prospects of a BJP re-election in 2019,” it added.
The report noted that the Modi-led government “would surely want to build on the perception that the UP victory has validated the government’s demonetisation drive”.
Accordingly, the union ministry of finance, among other measures, is likely to threaten to investigate black money hoarders’ property investments using the Benami Property Act. The government had announced demonetisation of Rs 500 and Rs 1,000 currency notes in November, last year, with an aim to curb the black money menace.
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The government on December 16, 2016, had announced that the second income disclosure scheme will run till March 31.
Under this scheme, black money hoarders would have time until March-end to come clean by paying 50 per cent tax on bank deposits of junked currencies post-demonetisation.
For those holding unaccounted cash, it offered a new tax evasion amnesty scheme wherein 50 per cent tax will be charged on declarations and a quarter of the total sum would be parked in a non-interest bearing deposit for four years.