A day before the completion of one year of Prime Minister Narendra Modi unleashing his demonetisation drive, the Government has gone in top gear to spell out gains of “note bandi”, while the Opposition is gearing up to observe November 8 as “Black Day”.
While Finance Minister Arun Jaitley and law & Justice Minister Ravi Shankar Prasad on Monday spelled out the “numerous” benefits of demonetisation, West Bengal Chief Minister Mamata Banerjee called the note ban as disaster and said the Opposition will observe November 8 as Black Day to protest against this “scam”. Incidentally, soon after the Prime Minister called on ailing DMK chief Karunanidhi in Chennai, the Dravidian party too announced its decision to observe November 8 as “Black Day” along with other Opposition parties.
On its part, the Government claimed that the Income Tax (I-T) Department has detected 20,572 “suspicious” tax returns for detailed scrutiny in which there are discrepancies in incomes before and after demonetisation. Besides, the department has also identified one lakh “high risk” cases of alleged tax evasion for detailed investigation, according to official sources.
The Opposition has severely criticised the Modi Government for the “dramatic” note ban drive. Nearly a year later, the pain is still fresh in the minds of common man and hence the debate refuses to die down.
The Opposition said that demonetisation slowed the economy and brought hardship to the population at large. The critics of the demonetisation are also gloating over the fact that more than 99 per cent of the scrapped high-value notes came back to the Central bank.
The I-T department initiated the first phase of the “Operation Clean Money” on January 31 this year to curb black money and stash funds in the wake of the withdrawal of Rs 500 and Rs 1,000 notes — the two highest value banknotes of the time — from circulation on November 8, 2016.
Sources, however, said 20,572 tax returns have been selected for detailed scrutiny after their profiles before and after demonetisation did not match. A scrutiny procedure in the I-T Department parlance denotes submission of a volume of records and testimonials, after which the taxman or the assessing officer makes sure that the return filed is correct and the filer has not evaded any tax.
Encouraging the note ban step of the Government to fight black money and corruption, Arun Jaitley said excessive cash in the economy has its own cost and India is gradually moving towards digital transactions.
“Some people have problem in accepting the fact that transactions through the digital mode and banking instruments are going to witness a rapid growth as compared to cash dealings,” Jaitley said.
Union Minister Ravi Shankar Prasad said, “After demonetisation, the nation is changing, becoming more honest and after GST the nation will move forward.”
“The Opposition does not understand one thing that today’s nation wants to become honest, give taxes, digital payment is increasing.
Some people have problems as they are happy with black money,” he added.
The I-T Department’s suspicion rose because it had the record only 13.28 crore Permanent Account Numbers (PANs) which have been linked with the Aadhaar till now as Government had made the PAN-Aadhaar linking mandatory for filing ITR (Income Tax Return) and obtaining a new PAN from July 1.
However, sources said, “Only 39.5 per cent of PANs are now linked with Aadhaar numbers, according to the sources. There are about 33 crore PAN cards, while Aadhaar has been issued to about 115 crore people.”
There were 17.73 lakh suspicious cases involving Rs 3.68 lakh crore were identified by the taxman in 23.22 lakh bank accounts post demonetization, according to official data.
“Responses from 11.8 lakh people for 16.92 lakh bank accounts have been received by the department through online medium till now,” the data said.
The I-T department had conducted 900 searches between November 9, 2016 and March this year, leading to seizures of assets worth Rs 900 crore, including Rs 636 crore in cash. “The searched led to the disclosure of Rs 7,961 crore undisclosed income, said the official data, adding that during the same period, the department conducted 8,239 survey operations leading to detection of Rs 6,745 crore of black money.
However, Jaitley further said that banking is the lifeline of the economy and it will gain further importance in the coming days and a healthy banking system will help support growth of the economy.
Echoing the Finance Minister’s voice on note bandi, bankers said the Rs note bandi’ was good for them as it resulted in higher deposits and pushed digitisation at a faster pace. “For the banking sector, I would consider it positive as lots of money has come into the formal banking system. Casa (current account, savings account) deposits have gone up by minimum 250-300 basis points which itself is a big positive,” SBI Chairman Rajnish Kumar said.
While private lender ICICI Bank Chief Executive Chanda Kochhar said the note ban led to formalisation of financial savings and increased the flow of funds to mutual funds and insurance. “Post-demonetisation, there was a faster shift towards digitisation. Going forward, the whole approach towards digitisation will continue,” Kochhar said.
As per the Government, over 99 per cent of the demonetised Rs 500 and Rs 1,000 notes are back in the banking system, while RBI annual report said Rs 15.28 lakh crore came back, out of Rs 15.44 lakh crore in circulation. In the early days of demonetisation, experts had estimated that nearly Rs 3 lakh crore of unaccounted money would not come into the system. Then Attorney General Mukul Rohtagi said on record that Rs 4-5 lakh crore would probably not find its way back.
With only Rs 16,000 crore not returning, the Opposition and those against the entire exercise used this number to criticise the Government. The Government and its supporters were ridiculed on all available platforms for making the country go through so much pain for nothing.
Also, the Government’s crackdown on shell companies shows that around 35,000 of the 2.24 lakh shell companies deposited Rs 17,000 crore post-demonetisation drive only to withdraw it later, thus raising suspicions of ‘wrong entries’.
The I-T department, which is responsible to track down the deposits, has rolled up its sleeves. It will start dispatching notices under the Income Tax Act to nearly 70,000 entities that deposited over Rs 50 lakh each in old notes into bank accounts but did not care to reply to data uploaded in their accounts or even file returns. A total of 2 lakh such accounts were identified; 1.3 lakh account holders have already responded to the enquiry.