Cash crunch: Income tax officials raid currency hoarders in Karnataka, Andhra Pradesh; target large contractors

Amid the ongoing cash crunch in the country, tax authorities have reportedly conducted close to 35 raids in Karnataka and in parts of Andhra Pradesh in a bid to corner currency hoarders.

Andhra Pradesh and Telangana are reporting acute cash shortages and authorities are examining the role of large contractors, and subcontracts, in the two states. The focus of the raids were individuals, and entities that have withdrawn large sums in recent weeks, a senior I-T official told The Times of India.

 Cash crunch: Income tax officials raid currency hoarders in Karnataka, Andhra Pradesh; target large contractors

Representational image. Reuters.

"In some cases, the withdrawals are not justified and they do not tally with the income or spending patterns. We believe that cash is only being held with no actual spending planned in several cases,” a source was quoted as saying by the newspaper.

Paytm, rivals gain

Meanwhile, mobile wallet companies like Paytm, Mobikwik and Flipkart-owned PhonePe logged a significant jump in digital transactions amid the cash crunch. One97 Communications, which owns the Paytm brand, reported a 30 percent surge in transactions so far this month, over the preceding month.

The firm said that Andhra Pradesh and Telangana apart, Bihar, Gujarat, Assam, Karnataka, Maharashtra, Rajasthan, Uttar Pradesh and Madhya Pradesh too reported higher transactions.

"In the wake of the ongoing cash crunch, customers are using more of our services, which has led to phenomenal growth in money transfers and QR-based payments in the cities where the ATMs have gone dry," Paytm COO Kiran Vasireddy told the PTI.

Government officials claim that the cash position across the country is fast improving, with over 80 per cent of India's roughly 2.2 lakh ATMs operating normally on Wednesday.

An unusual spurt in demand for cash in early April resulted in some dry ATMs in some pockets, and shortages of cash at a few bank branches.

With inputs from PTI

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Updated Date: Apr 19, 2018 18:39:41 IST