Demonetisation: Taxmen to target Rs 3 lakh cr unexplained cash deposits

If the tax department is able to identify Rs 3 lakh crore deposits as unaccounted cash, it will also vindicate NDA govt

In a bid to showcase the success of demonetisation, CBDT chairman Sushil Chandra has asked tax officials to come down heavily on those who are unable to explain their cash deposits.

In a video conference, CBDT chairman Sushil Chandra recently asked senior officials of the tax department to target and impose tax on Rs 3 lakh crore deposits, reported Economic Times. According to persons who attended the meeting, this estimated amount is equal to the unexplained cash parked with banks after demonetisation was announced.

"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)," officials  told ET.

Last month, while detailing the impact of demonetisation of old Rs 500 and Rs 1,000 notes on black money, the Income Tax department said ’Operation Clean Money’ was launched on January 31 to analyse data of persons who deposited large sums of cash post note-ban, with no previous matching returns of income. While Rs15,496 crore was admitted as undisclosed income, surveys resulted in seizure of Rs 13,920 crore.

Government's attempt to showcase success of demonetisation

If the tax department is able to identify Rs 3 lakh crore deposits as unaccounted cash, it will shore up overall direct tax collection in a slowing economy. Moreover, it will also vindicate Prime Minister Narendra Modi-led NDA, which has been blamed by the Opposition for the dip in growth.

Govt's 15% growth target for achievement of Budget Estimates

With over Rs 15 lakh crore of junked currency coming back into the banking system post demonetisation, the government said a "significant portion" of it could be black money.

Where's the manpower?

This process of tracking people and taking action against them, entailing a case-by¬case scrutiny, could be tedious and time consuming. It could be taxing times for tax officials as well as those they turn their glare on.

According to reports, the Income Tax Department has been facing major manpower crunch since demonetisation. Due to this crunch, there are no officials in the department to carry out different processes like tracking defaulters. Last month, in a letter to the Central Board of Direct Taxes (CBDT), the Income Tax Department’s Employees Organization had requested to provide necessary manpower.