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Tax evaders likely to face more scrutiny after PMGKY ends

LiveMint logoLiveMint 26-03-2017 Remya Nair

New Delhi: Tax evaders should brace themselves for more intrusive scrutiny by the income-tax department once the Pradhan Mantri Garib Kalyan Yojana (PMGKY) ends in less than a week.

The tax department is expected to send out notices to all those individuals who failed to respond to mails and messages sent by the department asking for an explanation of high-value deposits made after demonetization.

Armed with more specific demonetization data, thanks to advanced data analytics, the department is also likely to zero in on more tax evaders in the coming days, said a government official who did not wish to be identified. Further, the department may also intensify its survey operations to look for tax evasion by businesses.

Of the 1.8 million taxpayers who were sent emails and messages to explain the sources of their high-value tax deposits under Operation Clean Money, only 871,000 have responded, according to the income-tax department. These 1.8 million were those individuals who had deposited more than Rs5 lakh in their accounts between 10 November and 30 December, which did not match their known income sources.

During the debate on the finance bill on Wednesday, finance minister Arun Jaitley warned that the government will take action against non-responders as per the provisions of the Income Tax Act.

The government introduced the Pradhan Mantri Garib Kalyan Yojana last year to give tax evaders a chance to declare their undeclared income after the National Democratic Alliance declared old Rs500 and Rs1,000 notes as illegal tender with effect from 9 November.

Under the scheme that ends on 31 March, taxpayers can declare undisclosed income and get away with paying a tax and penalty of nearly 50%. The declarant will also have to put 25% of the undisclosed income in zero-interest deposits with a lock-in period of four years. However, the declaration under the scheme can only be filed once the tax has been paid and the deposit locked in.

The tax department has stepped up its social media campaign to encourage tax evaders to avail the scheme.

In case the taxpayer does not declare under the window but gets caught later, the tax and penalty levied will be more than 80%.

The tax department has identified 10.9 million accounts where deposits ranging from Rs2-80 lakh were made, with the average deposit size being Rs5.03 lakh, in the aftermath of demonetization.

Around 148,000 accounts received deposits of more than Rs80 lakh, where the average deposit size was Rs3.31 crore.

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