Skip to main content

Govt looks to curb domestic circulation of black money

By
To widen mandatory quoting of PAN, scope for annual information returns
After cracking down on unaccounted money stashed abroad by Indians, the government is now working to curb domestic flow of black money, by plugging gaps in regulations.
At present, the Central Board of Direct Taxes ( CBDT) is looking to rationalise income- tax rules; the move includes widening of coverage for mandatory quoting of permanent account number ( PAN) for specified transactions. Also, it is considering expanding the scope of mandatory annual information returns ( AIRs) for third- party agencies, to capture greater information, in line with the government’s efforts to build a large database for checking tax evasion and the flow of black money in the economy.
“To curtail the flow of domestic black money in the economy, we are working to strengthen capture of information by rationalising two rules under the income- tax act — mandatory issuance of PAN card and the mandatory annual information returns ( 114B and 114E, respectively),” said a government official. At present, quoting of PAN is mandatory for sale or purchase of any immovable property valued at Rs.5 lakh or more, purchase of any motor vehicle, and payment of bills exceeding Rs.25,000 in one go at hotels and restaurants, among other things.
The government is looking at lowering thresholds for mandatory furnishing of PAN card where they are too high, and increasing the limits where they are too low. Besides, it will add new items to the list of transactions where furnishing of PAN is mandatory. Some irrelevant transactions will be removed from that list.
In the case of AIRs, the government will likely expand the list of third- party sources for mandatory reporting ( seven sources at present), and also revisit the thresholds.
“We will revisit the thresholds by lowering them in the cases where they are too high, and raise the limits in the cases where they are too low and lead to excessive information flow that we do not require — for both PAN card furnishing and AIR. We will add more transactions and third- party sources to the list for AIR and delete those that have become irrelevant. Basically, it will be rationalisation of income- tax rules,” he added.
Quoting PAN is mandatory for cash deposits aggregating Rs.50,000 or more at banks, or life insurance premiums of more than Rs.50,000 a year.
There are seven categories of transactions where third- parties like banks, mutual funds and insurance companies have to report transactions by individuals to the incometax department. For instance, if you deposit Rs.10 lakh or more in a year, the bank concerned will have to report it to the department. The department will then use this information to see if the assessee concerned files accurate returns.
A company issuing credit cards where payment against bills exceeds Rs.2 lakh in a year for a person also has to report this to the department. Similarly, mutual funds collecting Rs.2 lakh or more for sale of units by one person, companies receiving Rs.5 lakh or more against issue of shares, bonds/ debentures and registrar/ subregistrars in respect of sale/ purchase of immovable property exceeding Rs.30 lakh, and the Reserve Bank of India for issue of bonds exceeding Rs.5 lakh, have to report the transactions to the department.
“The move will definitely have some deterring impact on flow of domestic black money,” said Rahul Garg, leader, direct taxes, PwC.
Rakesh Nangia, managing partner, Nangia and Co, said tackling of black money was a serious challenge for the government. “ It is a much bigger issue domestically. The move on rationalisation of transactions and the limits will definitely address the issue to some extent,” he said.
Recently, the authorities took various measures to deter those involved in circulation of black money.
For instance, targeting domestic flow and generation of black money in the mining sector, CBDT instructed income- tax officials to scrutinise production details and tax returns filed by the companies engaged in mining activities, and to take appropriate action in case a discrepancy was found.
QUOTING OF PAN
Current rule: Mandatory for sale or purchase of any immovable property valued at Rs.5 lakh or more; purchase of any motor vehicle; payment of bills exceeding Rs.25,000 in one go at hotels and restaurants Likely change: Lowering of thresholds for mandatory furnishing of PAN card where they are too high; increasing the limits where they are too low; adding new items to the list of transactions where furnishing of PAN is mandatory
ANNUAL INFORMATION RETURNS
Govt will expand the list of third- party sources for mandatory reporting ( seven sources at present)
Business Standard, New Delhi, 23rd Nov. 2015

Comments

Post a Comment

Popular posts from this blog

Household debt up, but India still lags emerging-market economies: RBI

By
  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...
Post a Comment
Read more

External spillovers likely to hit India's financial system: RBI report

By
  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...
Post a Comment
Read more

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

By
  New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...
Post a Comment
Read more