The Government of India launched a concerted drive against black
money with Demonetisation being an important step in that direction. Among the
main objectives of Demonetisation was the flushing out of black money and also
conversion of the non-formal economy into a formal economy to expand the tax
base. The impact of Demonetisation on black money, widening of tax base and
Direct Tax Collections is summed up hereunder:
A. Impact on black money:
Quantum jump in Enforcement actions based on Demonetisation data:
Searches
· 158% increase
in number of searches (from 447 to 1152 groups)
· 106% increase
in seizures (from Rs. 712 crore to Rs.1469 crore)
· 38% increase
in admission of undisclosed income (from Rs.11,226 crore to Rs. 1,54,96 crore)
Surveys
· 183% increase
in surveys (from 4422 to 12520)
· 44% increase
in undisclosed income detected (from Rs. 9654 crore to Rs. 13920 crore)
Operation Clean Money:
The Income Tax Department launched ‘Operation Clean Money’(OCM) on
31st January, 2017 to analyse the data of the persons who
deposited large sums of cash and whose returns of income were not in sync with
such deposits.
Phase 1:
· In
the first phase of OCM, 18 lakh suspect cases were
identified through use of data analytics where cash transactions did not appear
to be in line with the tax profile of depositors.
· Online
verification in these cases was enabled and done in a record time of 4 weeks.
· The
success of the first phase was also attributable to the massive taxpayers’
awareness and media campaigns on Operation Clean Money launched by the
Department.
· The
scale of the Operation may be gauged from the fact that response of
9.72 lakh persons in respect of 13.33 lakh accounts involving cash deposits of
around Rs.2.89 lakh crore, as per pre-defined parameters on sources of the
cash deposits was captured by the Income Tax Department within a short span of
3-4 weeks. Online queries were raised in more than 35000 cases and online
verification was completed in more than 7800 cases.
Phase 2:
· The
Operation Clean money has since moved into the next phase that includes
enforcement actions in high risk cases, taxpayer engagement through a dedicated
website in medium risk cases and close monitoring in low risk cases.
· The
high, medium and low risk cases have been identified through use of advanced
data analytics, including integration of data sources, relationship clustering
and fund tracking.
· The
exercise has also unearthed large number of persons and clusters having suspect
transactions. These include about 14,000 properties of more than Rs.1
crore each where persons have not even filed Income Tax Returns.
The investigations are in progress.
B. Impact on Widening of
Tax-base:
· The
number of e-returns of Individual taxpayers filed
till 5th August, 2017 (due date of filing) increased to
2.79 crore from 2.22 crore returns filed during the corresponding period of
last year, registering an increase of about 57 lakh returns (25.3%). This shows
marked improvement in the level of voluntary compliance as a result of action
taken by the Income Tax Department on the basis of data of cash deposits in the
wake of demonetization.
· The
total number of all returns (electronic + paper) filed during
the entire Financial Year 2016-17 was 5.43 crore which is
17.3% more than the returns filed during FY 2015-16.
· For
FY 2016-17, 1.26 crore new taxpayers (return filers + non-filers making tax
payments) were added to the tax base (till 30.06.2017).
C. Impact on Direct Tax Collections:
The effect of Demonetization is also clearly visible in the growth
in Direct Tax Collections. Collection of Advance Tax under Personal Income Tax
(i.e. other than Corporate Tax) as on 05.08.2017 showed a growth of about
41.79% over the corresponding period in F.Y. 2016-2017. Collection of
Self-Assessment Tax under Personal Income Tax showed a growth of 34.25% over
the corresponding period in F.Y. 2016-2017.
***************
DSM/SBS