Muted response to 2nd black money disclosure scheme ACTION PLAN
The government’s efforts to get people to disclose unaccounted cash deposited in banks after the note ban have received a muted response.
At the end of February, the Pradhan Mantri Garib Kalyan Yojana (PMGKY), also known as the Income Declaration Scheme II, saw declarations of ~2,500 crore, of which the Mumbai circle accounted for ~500 crore.
Offering a final option to holders of black money, the government had on December 17 provided them time until March 31 to come clean on deposits of banned currency notes in banks. For those holding unaccounted cash, the PMGKY proposed to tax 50 per cent of the declared amount and park 25 per cent in an interest-free deposit for 1.8 mn people under radar, for depositing ~4.5 lakh crore during four years.
The informal tax collection target for the scheme was over ~75,000 crore, double that of the Income Disclosure Scheme I. To collect that amount, the disclosure would have to be to the tune of ~1.5 lakh crore. The scheme is part of the Taxation demonetisation Survey began on 1.05 mn, who have not responded to request for online verification. Verification of each case will be completed only when it has been marked “acceptable”/ “not acceptable” Cases under “not acceptable category” might lead to advance processing of such cases involving
possible tax evasion Laws (Second Amendment) Act, 2016, approved by the Lok Sabha in December 2016.
The tepid collection has prompted the Central Board of Direct Taxes (CBDT) to conduct a video conference with tax officials across the country for a plan to make the scheme successful.
Sources said taxmen were asked to focus on the 1.8 million individuals who had deposited ~4.5 lakh crore identified under Operation Clean Money. These individuals had come under scrutiny because their cash deposits did not match their tax profiles.
The income tax department has asked the 1.8 million individuals to explain the source of their deposits and has received 750,000 responses. Assessing officers have been asked to consider the remarks provided in the online verification and seek information to quantify any unexplained income.
The income tax department will also contact the 1.05 million individuals who have not responded to its request for online verification.
The CBDT also said the verification of each case should be completed only when each information record was verified and marked acceptable. Other cases would be escalated to the Directorate of Systems, source added.
Sources said if the cash was received from unidentifiable sources, the assessing officer would verify cash receipts with respective bank branches. Income tax officials have begun to track such benami deposits at banks.