Rs500, Rs1000 note ban: Tax evaders engaging in illegal transactions on I-T dept radar
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New Delhi: The income tax department on Thursday conducted multiple surveys in Delhi, Mumbai and other major Indian cities amid reports that tax evaders were engaging in illegal transactions to dispose of unaccounted wealth.
Buying gold from jewellers in cash without providing a permanent account number (PAN), backdated bills for high-value purchases and money launderers accepting Rs500 and Rs1,000 notes for a commission and foreign exchange conversions at a premium were some of the prominent trends being reported after the government announced demonetizing the high-value bank notes with effect from midnight Tuesday.
The notes ceased to be legal tender as part of a government crackdown on black money and terror financing through fake currency notes.
People have been given time until 30 December to deposit the notes in bank accounts; the use of these notes has been permitted for select purposes for a limited period.
The move has led to widespread panic among tax evaders, especially after the government later announced that cash deposits of more than Rs2.5 lakh would come under the tax department’s scrutiny.
It also said high value cash deposits of more than Rs10 lakh will attract a tax and a 200% penalty if they are not explained by the declared sources of income. This led tax evaders to look for ways of disposing of their cash in the past couple of days.
The tax department has been closely watching prominent business centres after the announcement was made, said a senior income tax department official, who did not want to be identified.
Scrutiny of jewellers has also been stepped up. “The jewellers’ books for the past few days will be scrutinized. 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 Rs2 lakh in cash. He will be asked to submit PAN of buyers,” he said.
Taxmen are also keeping track of transactions where backdated bills are being generated by jewellers, the official said.
In New Delhi, the 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.
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 Rs2.5 lakh will not attract any scrutiny from the tax department.
PTI contributed to this story.