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Note ban effect: Tax receipts jump to record levels

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Although the Pradhan Mantri Garib Kalyan Yojana (PMGKY) gotatepid response, advance tax and selfassessment tax collections in the last financial year registered the  highest growth rate in at least five years, suggesting many people regularised their unaccounted income by recording it in the books.
Advance tax grew by 15 per cent in 2016-17, compared to 7.5 per cent in the previous financial year, while selfassessment tax, which can be declared for two previous  years, sawa24 per cent jump as against five per cent in 2015-16. “The trend in tax collection for 2016-17 indicates that many people tried to regularise their income  through the normal accounting route.
This was an obvious route to take if you see the tax rate differential between the PMGKY and normal tax incidence,” saidasenior government official.
“We haven´t seen such robust collection in at least five years, as 2012-13 is the readily available data we have at the moment,” he added.
The PMGKY, an amnesty scheme launched by the Centre after the demonetisation move, provides an opportunity to declare unaccounted wealth inaconfidential manner and avoid prosecution after payingafine of 50 per cent on the undisclosed income.
An additional 25 per cent of the undisclosed income is invested in the scheme which can be refunded after four years, without any interest. Under the normal route, the tax rate is around 30 per cent. Entities and individuals apparently regularised their unaccounted money after demonetisation by recording  higher sales in their books and also revising income of previous years to escape tax sleuths.
Income tax returns grew by 21.7 per cent in 2016-17, whereas the gross collections grew by 16 per cent, the highest in the last five years.
Income tax net collections grew at 14 per cent, the highest in three years, despite higher refunds issued during the last year.
Government officials, however, argue that such cases may not necessarily be safe and may come under scrutiny at the time of assessment.
“While those who have accounted their income and paid tax may be relatively safe, cases showing unusual increase in their accounted income will come under the scanner,” said another official.
Another official pointed out that the PMGKY did not take off properly as contours of the scheme came out much after the demonetisation announcement, and by then many  had already converted the unaccounted cash atasmall premium.
He added it was unlikely that the government would come out withadeclaration scheme anytime soon.
In the first phase of “Operation Clean Money”, around 18 million people, who entered into cash transactions that did not appear to be in line with their tax profile,  were identified and requested for online responses on such transactions.
Of those, around 946,000 lakh responded.
More than 60,000 individuals, including 1,300 highrisk persons, have been identified for investigation for claims of excessive cash sales during the demonetisation  period.
More than 6,000 transactions of highvalue property purchase and 6,600 cases of outward remittances are also under tax sleuths´ scanner.
The Business Standard New Delhi, 27th April 2017

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