CBDT Opens Checking A/c on Rs 3Lcr Deposits

CBDT Opens Checking A/c on Rs  3Lcr Deposits

Apex body chief tells tax officers to target unexplained deposits after demonetisation

It could be taxing times for tax officials as well as those they turn their glare on. They have been told by the chief of the Central Board of Direct Taxes (CBDT), the apex body, to target and impose tax on Rs 3 lakh crore deposits which is estimated to be the quantum of unexplained cash parked with banks after demonetisation was announced. CBDT chairman Sushil Chandra conveyed the message in a recent video conference to senior officials of I-T department, according to two persons who attended the meeting.

Identifying a sizeable slice of deposits as unaccounted cash will not on the sizeable slice of deposits as unaccounted cash will shore up overall direct tax collection also give the government a chance to showcase the success of demonetisation ly shore up overall direct tax collection in a slowing economy, but also give the government a chance to showcase the success of demoneti- sation which has been blamed by the Opposition for the dip in growth.

Tax authorities technically have the power to come down heavily on those who are unable to explain their cash deposit by slapping 60% tax and penalty. But such a process, entailing a case-by-case scrutiny, could be tedious and time consuming.

“It’s unclear how the Rs 3 lakh crore number has been arrived at… even if it is a fairly accurate estimate, which it probably is, the department will take about two years before it begins to verify the explanations (that depositors offer). In next few months, the assessments pertaining to notices which were sent in September 2015 (for the financial year 2014-15) will have to be dealt with as these will get time-barred in December 2017,” said a person familiar with the matter.

Jaitley cited strong direct tax and indirect tax numbers to argue against what’s being described by some as a structural slowdown and not a temporary disruption due to demonetisation and GST rollout.“I at least never imagined that the states will reach the breakeven point in the first twothree months itself,” Jaitley said, referring to GST revenue, while adding that some teething problems were inevitable.

The likelihood of revenues reaching the anticipated figure in the initial months hadn’t been expected and these are likely to rise further in the next few months, he said, before citing a strong 15.7% rise in direct taxes so far. GST collections have topped Rs 90,000 crore both in July and August.“So this so-called slowdown that some visualised hasn’t impacted that,” he said. The government was making incremental changes to the economy and had managed to break the policy logjam under the previous government.

“Small areas which were paralysed, at least under UPA2, because of discretion being used and misused, we were completely able to distance ourselves from this,” he said.Jaitley said when the government took over, the first 17 highway contracts did not attract a single bidder, but today India is back to creating more than 20 km a day.

“We not only opened up several sectors, we made the entry smoother... India attracted highest level of FDI (foreign direct investment) year after year,” he said, citing strong overseas inflows.He said demonetisation had created a new normal, defending the note ban.

“Prime Minister Narendra Modi had a very strong agenda on creating a new normal as far as the India shadow economy was concerned,” he said. Demonetisation was aimed at cracking down on black money. Jaitley said the government is trying to balance the need to accelerate the pace of growth and taking care of the needs of the poor.

“So, getting cross-sections on the government’s side and arousing a new confidence in them has been the basic tenor of this government in the past three and a half years,” he said. On the issue of prices, the finance minister noted that the government had inherited inflation of 9-10% and had brought it down to a respectable level.

“For them (opposition), 3.36% is also inflation. Of course, system needs inflation otherwise the economy will go into a recession,” he said.

The Economic Times, New Delhi, 29th september