Demonetisation has hit black money, says finance ministry

Countering the Opposition’s criticism of demonetisation yielding no benefit except harassment of public as the RBI report showed almost 99 per cent of the scraped money returned to the banking system, the finance ministry on Thursday claimed many gains, including achievement of the main objective of flushing out the black money and converting the non-formal economy into a formal economy.

In a detailed statement, it listed demonetisation’s impact on black money, widened tax base and increased direct tax collections. With reference to its impact on the black money, it said quantum jump in enforcement actions based on the demonetisation data is the proof.

It pointed out 158 per cent increase in the number of searches (from 447 to 1152 groups), 106 per cent increase in seizures (from Rs 712 crore to Rs.1469 crore) and 38 per cent increase in admission of undisclosed income (from Rs 11,226 crore to Rs 1,54,96 crore). There was also 183 per cent increase in surveys (from 4,422 to 12,520) and 44 per cent increase in undisclosed income detected (from Rs 9,654 crore to Rs 13,920 crore).

The ministry said the demonetisation data helped the Income Tax Department to launch ''Operation Clean Money''(OCM) on January 31 to identify persons who deposited large sums of cash and whose returns of income were not in sync with such deposits. In the first phase, 18 lakh such suspect cases were identified and their online verification was done in a record time of four weeks.

The scale of the operation may be gauged from the fact that response of 9.72 lakh persons in respect of 13.33 lakh accounts involving cash deposits of around Rs.2.89 lakh crore were recorded while online queries were raised in more than 35,000 cases and online verification completed in more than 7,800 cases.

In the second phase of the OCM, enforcement actions were initiated in high, medium and low risk cases that unearthed large number of persons with suspect transactions, including about 14,000 properties of more than Rs1 crore each where persons have not even filed Income Tax Returns. The investigations are in progress.

Regarding widening of the tax base in the country, the ministry claimed 57 lakh income tax e-returns were filed by individuals till August 5, the due last date, amounting to 25.3 per cent increase over the previous year. It shows marked improvement in the level of voluntary compliance only due to demonetisation. The total number of all returns (electronic + paper) filed during the entire Financial Year 2016-17 was 5.43 crore which is 17.3 per cent more than the returns filed during FY 2015-16.