Active Stocks
Tue Mar 19 2024 13:11:02
  1. Tata Consultancy Services share price
  2. 4,014.70 -3.14%
  1. Tata Steel share price
  2. 150.15 0.37%
  1. Bharti Airtel share price
  2. 1,229.45 0.36%
  1. Power Grid Corporation Of India share price
  2. 261.00 -1.51%
  1. ITC share price
  2. 409.85 -1.81%
Business News/ Politics / Policy/  Tax department to probe companies with sudden rise in cash sales after note ban
BackBack

Tax department to probe companies with sudden rise in cash sales after note ban

If the cash sales of any firm shows an abnormal hike, the tax depertment will match its sales and inventory data with those of months before demonetisation

On the taxman’s radar are traders and business establishments that have shown a sudden rise in cash sales or inventory purchase immediately after 8 November . Photo: Pradeep Gaur/MintPremium
On the taxman’s radar are traders and business establishments that have shown a sudden rise in cash sales or inventory purchase immediately after 8 November . Photo: Pradeep Gaur/Mint

New Delhi: Tightening its scrutiny of cash deposits after demonetisation, the income tax department is closely looking at any business entity showing a sudden spurt in cash sales in November and December in a bid to detect possible tax evasion.

In every case of abnormal increase in the cash sale, the tax department will match the sales and inventory data claimed by any company, enterprise or trading establishment with those of prior months to find out if blackmoney was being camouflaged as business sales, a senior government official said.

On the taxman’s radar are traders and business establishments that have shown a sudden rise in cash sales or inventory purchase immediately after 8 November when the government unveiled its decision to demonetise old Rs500 and Rs1,000 notes.

“There are instances of business entities depositing higher taxes (VAT and excise duty) after claiming a rise in sales or inventories being cleared," the official said, adding that the government had allowed the use of the junked currency to pay statutory dues in the immediate aftermath of demonetisation. The tax department will verify if the cash transactions shown are in line with the normal business during the given period of a year.

ALSO READ: Taxpayers to get GST updates on finance ministry app

For this, taxmen will look into monthly sales summary with a break-up of cash and credit sales as well as historic bank statements to identify cases of back-dating of cash or fictitious sales.

“The idea is to catch anyone using the garb of a business entity to convert unaccounted cash (blackmoney) to white using the 50-day period provided to deposit holding of old currency in bank accounts," the official said.

Any growth in cash sales during 9 November to 30 December, 2016 or any abnormal jump in percentage of cash sales to unidentifiable persons compared to the earlier history is also going to attract I-T glare. Transfer from bank accounts after the cash is deposited to any entity not related to the business will also be closely examined, he said, adding that cash donations will also be looked into.

Non-availability of stock or attempts to inflate stock by introducing fictitious purchases will also be part of the investigation. The official said that like individuals, any company, partnership or proprietorship can also avail of the tax amnesty scheme—the Pradhan Mantri Garib Kalyan Yojana (PMGKY).

They can disclose unaccounted cash, pay up 50% tax, deposit another quarter in a zero-interest bearing 4-year deposit and claim amnesty. The tax department, however, will ascertain if the tax is actually being deposited and evidence of the deposit being made before closing the verification, he added.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Politics News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 23 Feb 2017, 09:08 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App