Cooperative banks barred from accepting deposits under tax amnesty scheme

A move that comes amidst the I-T department uncovering anomalies post demonetisation

The government has barred cooperative banks from accepting deposits under the new tax amnesty schemePradhan Mantri Garib Kalyan Yojana (PMGKY), a move that comes amidst the Income Tax department uncovering anomalies post demonetisation.

After junking old Rs 500 and Rs 1,000 notes, the Centre had come up with an amnesty scheme for holders of unaccounted cash by asking them to pay 50% tax and parking one-fourth of it in a no-interest bearing four-year deposit.

This deposit could be made with any banks. But now cooperative banks have been barred from accepting such deposits. The PMGKY scheme is open untill March 31.

"Application for the deposit in the form of Bonds Ledger Account shall be received by any banking company, other than Co-operative Banks, to which the Banking Regulation Act, 1949, applies," the government said while amending the notification for PMGKY, 2016.

Under the scheme, holders of unaccounted cash willing to avail the offer will have to first pay the tax amount and then fill up a challan form provided by the bank for availing the four-year deposit scheme.

The authorised banks have to electronically furnish the details of deposit to the Revenue Department on the next working day to enable information verification of the deposit before accepting the declaration under the PMGKY.

Full confidentiality of the data would be ensured by the RBI and authorised banks.

The amendment to the notification comes after the I-T department spotted irregularities in deposits of cooperative banks following demonetisation.

The I-T department's investigation revealed that deposits in the books of certain cooperative banks were in excess of the physical holding of the now-defunct 500 and Rs 1,000 rupees currency notes.

Initially, cooperative banks were allowed to take deposits of old currency notes and as per estimates, about Rs 16,000 crore was deposited. But six days into demonetisation, the RBI barred these banks from exchanging old currency notes or accepting deposits.