Rs 500, Rs 1,000 banned: Here's how I-T sleuths are tightening the screws on evaders

In a move aimed to get cracking on black money hoarders and terror financiers by flushing out fake currency notes, the government starting midnight Tuesday decided to demonetise Rs 500 and Rs 1,000 currency denomination from the system.

Even as common people have been standing in queues for hours outside their bank branches to legitimately exchange their old notes, the real targets are those tax evaders looking to dispose of their unaccounted wealth through illegal transactions.

Reuters

This is because the government has clearly spelt out that cash deposits exceeding Rs 2.5 lakh would face tax and 200 percent penalty, while higher value deposits of Rs 10 lakh or more will be considered tax. The higher penalty will be levied, especially, if a buyer's previously declared sources of income fails to match with the current explanation.

Related Articles

Why has RBI withdrawn Rs 2000 notes? How is this different from demonetisation?

China pips Saudi, Iran and Egypt to become world’s top executioner

Fearing income tax scrutiny and the apathy to pay such huge fine, tax evaders are looking at ways to dispose of their cash. However, income tax sleuths are keeping track of transactions primarily at the jewelers end where expectations of huge unaccounted wealth is likely to make its way into.

The I-T deparment have already started conducting search operations across the country since yesterday evening on information that jewelers and hawala operators were accepting the banned Rs 500 and Rs 1,000 notes at 40 percent discount, a Times of India report said.

So, here is how the tax department officials are taking measures to keep a vigil on such transactions:

1) The tax department has been closely watching prominent business centres after the announcement was made, a senior income tax department official has been quoted as saying in media reports.

2) Scrutiny of jewellers has also been stepped up. The jewellers' books for the past few days will be scrutinised. Further, when a jeweller comes to deposit cash by 30 December, he will be asked to account for deposits. He will be asked if he has sold jewellery for Rs 2 lakh in cash, and will also be asked to submit PAN of buyers.

3) Taxmen are also keeping track of transactions where backdated bills are being generated by jewellers.

4) In New Delhi, surveys were conducted in popular market places such as Karol Bagh, Dariba Kalan and Chandni Chowk, along with key trading hubs in Mumbai and Punjab.

5) Also, two big hawala operators were targeted in Mumbai after they found them receiving these banned notes at a discount, the ToI report said.

6) Not just that, the government has also asked jewellery stores across the country to provide CCTV camera footage from the night of 8 November, failing which action will be taken against errant jewellers, said a DNA report.

Through the footage, I-T officials are likely to track down people visiting jewellery shops on 8 November, and whether they have made several trips to the shops thereafter. Besides this, it would also keep a tab on different members of same family that went for jewellery shopping, the report added.

The tax department is hoping that the surveys will discourage traders from resorting to illegal transactions and lead them to deposit cash in bank accounts and pay the corresponding tax and penalty.

Despite its aggressive drive to check tax evaders, the government has been trying to reassure genuine taxpayers that they have nothing to worry about while making cash deposits.

The government has made it clear that cash deposits of less than Rs 2.5 lakh will not attract any scrutiny from the tax department.

With agency inputs