New Delhi: Launching Operation Clean Money, the income-tax department said on Tuesday that it has, for a start, identified 1.8 million people whose cash deposits after demonetization do not match their taxpayer profiles.

These taxpayers will have to answer queries about the source of income for these cash deposits in the next 10 days.

The exercise is part of the tax department’s efforts to reconcile demonetization-related data at its disposal and look for instances of tax evasion.

“The idea is to use the demonetization data and look for instances of tax evasion without causing any harassment to the taxpayers. They can log on to the online filing portal and answer queries without having to directly interact with the tax department officials," said revenue secretary Hasmukh Adhia at a press conference.

So far, the tax department has identified 10 million accounts wherein the cash deposits after demonetization exceeded Rs2 lakh. In the initial phase, the tax department is scrutinizing cash deposits above Rs5 lakh and suspicious deposits between Rs3 lakh and Rs5 lakh. The tax department will send out messages to taxpayers using their registered email addresses and mobile phone numbers asking them to log onto their online income tax return filing account—at https://incometaxindiaefiling.gov.in—and answer from a list of options on the source of income under the link “Cash transactions 2016".

Mint on 30 January reported about the tough scrutiny that the taxpayers will face on their cash deposits.

ALSO READ | Income tax returns to carry tough questions on large cash deposits

If the answer is found to be satisfactory, then the tax department will not pursue it further and will close the verification process. If the taxpayer does not explain the source of income within the stipulated time, the tax department will issue a notice to the taxpayer.

“This will be a continuous exercise to widen and deepen the tax base. The information will be updated on a dynamic basis. We have hired the services of data analytics as well. Money has lost its anonymity," said Sushil Chandra, chairman, Central Board of Direct Taxes (CBDT).

The increased scrutiny by the tax department comes at a time when it is estimated that a substantial part of the invalidated currency has returned to the banking system. This has led to fears that tax evaders had managed to use conduits and found other illegal ways to legalize their black money. The income-tax department tightened reporting requirements for banks and financial institutions, asking them to report all cash deposits above Rs2.5 lakh and any large one-time cash deposit exceeding Rs50,000 between 9 November and 30 December to the tax department.It also extended this reporting requirement to the period from 1 April to 9 November for suspicious accounts.

Close