11209 - Cash deposits above Rs 2L to be disclosed in ITR forms - Deccan Herald

Cash deposits above Rs 2L to be disclosed in ITR forms

Cash deposits above Rs 2L to be disclosed in ITR forms

Chetan Chandak, Apr 30 2017, 23:58 IST

The government’s war against black money is finding its expression in every reform that it makes. The recent being the introduction of the new one-page ITR forms. Where these forms are making it way easier for taxpayers to file their returns than before, it also seeks details of cash deposits of more than Rs 2 lakh made during the demonetisation period. Taxpayers will now have to give details about the money (more than Rs 2 lakh) deposited between November 9 and December 30. Part E of the form will have columns for these details to be filled up by the taxpayer. 

The intention as specified by the government is only to collect data for the cash deposited by individuals and that they do not intend to send any notices to anyone through this exercise. The government has also clarified that they will not question any individual depositing cash below Rs 2.5 lakh during that period.

The intention of the government behind this can be manifold since it will generate a lot of database. 

Some of the possible areas of generating useful information can be as follows: 

Aggregation of all the amounts deposited across all bank accounts

This information will give the aggregate amount of cash deposited in all the accounts of an individual including the accounts where the taxpayer’s PAN is not registered. Hence, all the accounts that are not yet mapped to PAN numbers will be disclosed in the ITR form. 

To identify all those taxpayers who have deposited cash of more than Rs 2.5 lakh

Secondly, its main intention can be to identify those taxpayers who have deposited cash in excess of Rs 2.5 lakh during the demonetisation period. The tax department will try to reconcile the treatment of these deposits in the tax return and check whether the taxpayer has offered it under the Pradhan Mantri Garib Kalyan Yojna (paying 50% taxes and depositing 25% in the scheme) or has given some different treatment.

In case the tax department identifies that the taxpayer has failed to disclose it in the tax return or has offered it under the normal provisions of the act and paid the taxes accordingly as per the normal rate, it will further investigate into the reasonability of such treatment. If the taxpayer fails to provide proper justification, he may have to pay tax @60% + surcharge @25% of such tax along with education cess @3% totaling to 77.25%. In addition tothis he may also be subjected to penalty of 10% and prosecution under The Taxation Laws (Second Amendment) Act, 2016. 

The only way to avoid this penalty isto disclose the details of cash deposited during the demonetization period in the tax return. Further if the source of these cash deposits cannot be explained then offering it under the Pradhan Mantri Garib Kalyan Yojna as discussed above is a safe option. 

The government with all these measures is making sure that there is minimum hassle to even those who might have huge reserves of black money by taking advantage of the schemes. 

Apart from this, the new ITR forms have some more new fields that are marked mandatory like quoting of the 12 digit Aadhaar enrolment number. This will also help in tracking those who have not enrolled for Aadhaar. Statistics reveal that although 111 crore people in India are already enrolled under Aadhaar, there are only 25 crore PAN card holders. 

Government tax reforms in the recent times are all aimed at better compliance at the same time making sure that their intention to eradicate black money from the system is fulfilled. Although these measures might seem tedious for the common man at large there are larger benefits in these that will help make lives easier for everyone. 

(The writer is Head of Tax Research, H&R Block India)

10271 - Legitimate political funding holds key to stemming generation of black money - Economic Times

Legitimate political funding holds key to stemming generation of black money

July 23, 2016, 5:27 AM IST ET Edit in ET Editorials | Economy, India | ET

The Centre’s reported move to send notices to 7 lakh individuals, spotted as having made high-value transactions without furnishing their permanent account number (PAN), serves more a political purpose than to collect more taxes or stem the generation of black money. The annual information returns, which identify potential taxpayers by examining their spending patterns, are useful to track down high net worth individuals evading taxes. However, audit trails snap when transactions reported via the tax information network lack PAN, as was the case with about 1.4 million transactions. Taxmen should make intelligent use of technology to nab evaders, rather than blunt instruments in law enforcement. This is eminently feasible if every large financial transaction is tagged with a unique identifier — PAN or Aadhaar.

About 250 million PANs have been issued, and four times as many Aadhaar numbers. Furnishing a unique identifier should be mandatory for all high-value financial transactions. Tax evasion is rife in real estate. Property registrars should require a unique identifier for both the seller and the buyer. India should adopt the Torrens system of registering land — wherein the owner’s name for any plot of land is directly entered into a registry, maintained and guaranteed by the government — to check benami land deals. The unorganised sector will come under the net when the goods and services tax is adopted and IT systems get interconnected. Audit trails will make available a unified database of tax potential on direct and indirect taxes. The income-tax base must be widened, given that less than 4% of people file tax returns; and just a few thousand admit to having incomes higher than Rs 1 crore a year. This, of course, must change.

The mother-of-all-reforms is to clean up political funding. Every political party should disclose its spending and sources of financing those expenses. These claims can be contested by other parties and watchdog bodies, with the Election Commission making the final verification. Legitimate political funding holds the key to stemming the generation of black money.

This piece appeared as an editorial opinion in the print edition of The Economic Times.

9667 - Aadhaar will benefit government in war on black money, benami deals - Hindustan Times

Aadhaar will benefit government in war on black money, benami deals

• Aloke Tikku and Moushumi Das Gupta, Hindustan Times, New Delhi |  Updated: Mar 26, 2016 10:21 IST

Aadhaar is the new weapon in the government’s armoury to fight black money and check frauds. (PTI Photo)

You will soon have to produce an Aadhaar number to access government services, right from applying for a driving licence to registering a property deed.

Delivering targeted subsidies isn’t all that the Aadhaar Bill passed by Parliament this month seeks to achieve. It also makes the 12-digit unique identity number the new weapon in the government’s armoury to fight black money, put an end to benami transactions and check frauds, too.

Once the new law comes into force, the government will start identifying public services that you can access only on producing an Aadhaar number. Those who do not have it will have to give proof that they have applied for one. Nearly 78% of the 128 crore population has been issued an Aadhaar number.

(Source: UIDAI (Data as on 29 February 2016))

Notwithstanding the risks to privacy , this will have its share of advantages.

“It will significantly reduce the problem of ghosts and duplicates in the system... what is called retail fraud,” ABP Pandey, director general and mission director, Unique Identification Authority of India, told HT.

For instance, Aadhaar will ensure that a person can get only one driving licence, irrespective of which corner of the country he gets it from. “Once people know they cannot get another licence, they will be more careful about violating traffic rules,” an official in the road transport and highways ministry said.

That could make Indian roads much safer. About 150,000 people die in road accidents in the country annually and nearly a third of motor vehicle drivers have a fake licence.

In a single stroke, Aadhaar could discourage people with black money from buying benami properties, a preferred investment to park funds. When the government makes Aadhaar mandatory for property transactions, people will not be able to buy properties in just about anybody’s name. Income tax authorities could easily check if the person in whose name a property was purchased had declared the income in tax returns.

It is a plan that finance minister Arun Jaitley has been mulling over for more than a year.

The income tax department last year started asking taxpayers to report their Aadhaar number in online returns. The incentive was that those who did so were spared the pain of sending their signed returns by post.

“Many people still did not give their number,” an income tax department official said. With the law on their side, the official said it would be possible for them to explicitly mandate that people do.

Read | Modi’s Aadhaar Bill may choke Advani’s citizenship card plan

“The idea has been to link Aadhaar with the PAN (permanent account number issued by the tax department) and the passport number. This will help the tax department track transactions and compare them with the income disclosed in the tax return,” an official said.

Government officials said the Delhi government move in 2013 making Aadhaar compulsory for accessing any service could be the norm across the country. The 2013 order, however, had to be withdrawn on Supreme Court directions in the absence of legislative backing for the number.

(With inputs from Timsy Jaipuria)

8835 - FM Arun Jaitley’s Facebook post: Linking PAN with cash transactions will hit blackmoney hard - Financial Express

FM Arun Jaitley’s Facebook post: Linking PAN with cash transactions will hit blackmoney hard

Finance Minister Arun Jaitley has done well by announcing in his Facebook post on Sunday that the government is planning to link permanent account number (PAN) with cash transactions to combat blackmoney.

By: Santosh Tiwari | October 5, 2015 3:36 PM

In a country of more than 120 crore people, only 3.6 crore file income tax returns despite more than 17 crore having PAN. Extensive use of PAN and its linking with Aadhaar is a key tax reform for curbing tax evasion and blackmoney.

Finance Minister Arun Jaitley has done well by announcing in his Facebook post on Sunday that the government is planning to link permanent account number (PAN) with cash transactions to combat blackmoney.

Linking of cash transactions with PAN would mean that the records of any cash transaction beyond a certain limit could be accessed by the Income-Tax Department – while this will help find out the tax evaders, it will also act as a deterrent and shut this major window for blackmoney operations.

The FM’s Facebook post has obviously been to tell people what the NDA government is doing to tackle black money after embarrassing results of the three-month compliance window which saw the disclosure of just Rs 3,770 crore; but the direction in which the government is moving now, though delayed, will yield good results if the steps he has outlined are pursued judiciously.

Jaitley has said: “The Government is at an advanced stage in considering the requirement of furnishing PAN card details if cash transactions beyond a certain limit are undertaken. The monitoring regime of income tax has been strengthened and its capacity to access information and apply technology driven analytical tools to expose evasion, has been enhanced. Its ability to detect large cash withdrawals, or large cash transactions which enter the system, is being strengthened. GST regime once introduced will also be a landmark step in this direction. Thus for commodities like gold where the initial purchase by the exporter is after the payment of custom duty, the subsequent transactions which are mostly in cash, can easily be found out”.

Going forward, it is quite clear that the government might also look at restructuring the personal income tax rate structure to address the issue of the highest tax rate of 30% kicking in at a low income of Rs 10 lakh – it should kick in at a higher income – and also enhanced promotion of plastic money.

The government must take note of the Tax Administration Reforms Commission (TARC) report’s suggestion here.

The Commission in one of its report submitted to the finance ministry in November 2014 pointed out that, “India has a low taxpayer base even as a percentage of the total population. With a population of over 120 crore, only 17 crore have a PAN and of these, about 3.6 crore file income tax returns. Only 3.3 per cent of the population pays tax, which is very low compared to 39 per cent in Singapore, 46 per cent in the USA, and 75 per cent in New Zealand. This, of course, reflects India’s low income levels, which, for a large part of the population, falls below the basic income tax threshold; yet huge potential remains to expand the taxpayer base… the base could perhaps be doubled at most to say 7 per cent”.

The Income-Tax Department has already started linking Aadhaar numbers to PAN through e-filing of tax returns to make the refund process easier and a non-intrusive handling of the taxpayers – 3,492,298 returns are already PAN-Aadhaar linked – and this process needs to be extended as far and wide as possible.

First Published on October 05, 2015 11:24 am

8256 - More ways to block black money - Live Mint

More ways to block black money

Along with encouraging electronic payments, ways should also be devised to discourage transactions in cash

Rajesh Kumar 

Shyamal Banerjee/Mint

The government of India has given a three-month window to people with undisclosed foreign assets to come clean or else face prosecution under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. The government also introduced the Benami Transactions (Prohibition) Amendment Bill, 2015, in Parliament during the budget session, which seeks to impound benami properties. 

Remember, the Bharatiya Janata Party-led National Democratic Alliance government was voted to office last year on the promise of curbing the menace of black money, among other things. While these are steps in the right direction, more will be required to control the flow of black money. The government will not only have to check the creation of black money, but also its use. 

The existing banking infrastructure and the use of Aadhaar can help attain this objective to a large extent. Recently, the government also released draft proposals for facilitating electronic transactions and proposed tax incentives to people opting for it. Although the draft mentions that it aims to curtail tax avoidance, if cash transactions are discouraged and made difficult, it will help the cause. Here are a few steps that could help block the flow of black money.

Along with encouraging electronic payments, ways should also be devised to discourage transactions in cash. Here’s how it can be done. An upper limit for cash transactions can be decided, and if a person still intends to pay this way, she will have to pay a penalty. Let us assume that the limit is imposed at Rs.10,000 and if someone wants to buy the latest smartphone worth Rs.40,000 with cash, she will have to pay a penalty of 10%, which will be deposited by the retailer with the government as tax (let’s call it cash transaction tax) against the buyer’s Aadhaar number. (In future, Permanent Account Number can also be replaced by Aadhaar, but that’s a different debate.) Normal excuses, such as not having an Aadhaar and bank account will not work.

Aadhaar is free and is sufficient for opening a bank account. Anyway, it’s hard to believe that people buying the latest gadgets and other white goods do not have a bank account. So, if someone still insist on paying by cash, you know why. This will require a bit of work in the background such as linking all bank accounts with Aadhaar, which will also show if transactions are in line with income. Initially, transactions in the area of medicine and agriculture can be exempted.

Cash transactions can also be made difficult by withdrawing bank notes of larger denominations. Bank notes in denominations of Rs.1,000 and Rs.500 are meant to facilitate cash transactions. But do we really want that? The unintended consequence is that it also makes transactions in black money easier. Therefore, if Rs.1,000 and Rs.500 notes are taken out of circulation and Rs.100 becomes the highest denomination for bank notes, cash handling and transacting will become difficult. Imagine the plight of the person buying that Rs.40,000 smartphone. People will also hesitate to produce large number of notes at billing counters as it will indicate only one thing. Human psychology will also come into play. Psychologically, people will not be comfortable settling large transactions in cash at marketplaces when the entire system is becoming cashless and using cash begins to give the wrong impression.

Cash transactions will become difficult, but then again it may not be possible to pay online all the time. Payments through cheques should also be encouraged. But since there could be trust issues between strangers while settling transactions through cheques, banks can be asked to rate accounts on the basis of banking history of the customer and mention the ratings on cheque leaves. For example, accounts can be rated as A, B or C, where A is the best. So, a person accepting an A-rated cheque will be sure about the settlement of the transaction. This will also encourage people to improve their rating, and thus enhance credibility. Account holders can be penalized by reducing their account rating if a cheque is not cleared.

Furthermore, reforms in the real estate sector will help curb creation and use of black money. Since the cost of transaction here is high, it leads to under-reporting. There is incentive for both the buyer and the seller to under-report the value and settle at least partially in cash. For example, stamp duty in Delhi is 6% for men and 4% for women. Plus, there is a registration fee of 1%. Both put together can be reduced to 0.5% or less. Since cash transactions will be difficult, buyers would be more inclined to report the real value and won’t mind paying the charges. Capital gains tax on real estate, too, can be rationalized. This will also result in liquidity and better price discovery in the property market. Additionally, since the idea is to curb cash transactions, ways can be devised to alert banks of unusual activities, such as large withdrawal of cash.

End note: Are these the only measures to eliminate black money? Probably not. More innovations will be required to route transactions through the banking system. As more transactions go through banking channels, reporting of income and tax compliance will improve leading to higher revenues. Higher tax revenues would, ideally, lead to lower tax rates, which will benefit all tax payers.

7812 - New I-T return forms to curb black money - The Hindu

NEW DELHI, April 18, 2015

Updated: April 18, 2015 03:07 IST

New I-T return forms to curb black money

SANJAY VIJAYAKUMAR

Indian taxpayers have to disclose details of all bank accounts held by them in the country and also foreign trips, as per the new income tax return forms, notified by the Central Board of Direct Taxes. This new disclosure will start with the assessment year 2015-16.

The requirements for additional disclosure come, as the government is trying hard to curb black money and improve tax collections.

Individuals having income from salary, pension, one house property and other sources like interest file the returns in ITR-1 form. Apart from this if they earn income from capital gains and foreign assets they file returns in ITR-2 forms.

The new forms require an assessee to furnish the number of accounts he/she holds including those opened and closed during the previous year and the balance in the account as on March 31.

The assessee will also have to furnish the name of the bank, account number/numbers, its address, The Indian Financial System Code (IFSC code) and any possible joint account holder.

“The disclosure requirement on number of accounts and also those opened and closed is interesting. A lot of people have a number of bank accounts and they leave some accounts passive or inactive,” Vineet Agarwal, Partner, KPMG, said.

Foreign travel

On foreign travel, tax payers are required to disclose passport number, the issuance place of the passport, countries visited, number of times such visits are made and in case of a resident taxpayer, the expenses incurred from own sources in relation to such travel.

The new ITR forms, this time, also feature a new column to include the Aadhaar number of the assessee.

“This could be part of the longer plan to include Aadhaar as a unique number, it might become bigger than PAN. Already bank accounts and gas subsidy are linked to Aadhaar” said Mr. Agarwal.

Another feature now is if an assessee has forgotten to file his return or revised return within deadline, he can approach the CBDT directly and get permission to file the return, which the authority will decide on the merits, he added.

7058 - Purchases over 1 lakh to need PAN, Aadhaar? - TNN

Purchases over 1 lakh to need PAN, Aadhaar?

TNN | Dec 13, 2014, 04.50AM IST

The SIT on black money has also recommended that the amount of cash in possession should be capped at Rs 10 or 15 lakh and any amount beyond the threshold be confiscated.

NEW DELHI: The Supreme Court-backed special investigation team (SIT) on black money has recommended a series of measures, including quoting of permanent account number for all purchases beyond Rs 1 lakh in addition to submitting an identity proof such as Aadhaar.

The rule, the SIT has suggested, should cover purchases made by cash as well as cheque. It has further recommended that a central "Know Your Customer" (KYC) database be set up which captures details of PAN, passport number or driving licence number, which are often quoted for transactions.

While several suggestions have been made by various experts panel in the past too, the government has been slow in implementing them and cracking down on the use of cash, which the SIT has pointed out also results in terror threats.

It has also recommended that the amount of cash in possession should be capped at Rs 10 or 15 lakh and any amount beyond the threshold be confiscated. The SIT has talked about checks on transportation of illegal wealth.

Justice (retired) MB Shah is heading the SIT to probe black money.

Citing European rules, barring cash transactions beyond a limit, the SIT has said that a similar system should be followed in India as well but the limit should be fixed as the common man's daily transactions are not impacted.

As a strong deterrent, the panel has recommended that tax crimes be made predicate offence with a high tax evasion threshold such as Rs 50 lakh so that it does not cause hardship to small tax payers. The move pushed by the Finance Action Task Force, the global group against money laundering, the underlying crimes that give rise to money laundering. SIT has suggested that this should be brought under Prevention of Money Laundering Act.

READ ALSO: SIT traces Rs 4,479 crore in Swiss banks, Rs 14,958 crore in India

The SIT has also underlined the need to tally the Indian export and import data with those of other countries — on a quarterly, if not monthly, basis — as a tool against over-invoicing and under-invoicing.

This it said has been suggested by FATF, which has India as a member.

The SIT to probe black money was constituted a day after Modi government took office.

While pointing out that over- and under-invoicing of export and import is a known source of stashing black money overseas, the Supreme Court-backed panel has also said that bills of export or shipping bills should include a new column on the international price of the goods or the machinery to be shipped out as a possible deterrent.

Further, it has suggested that cross-border wire transfer of funds should be monitored carefully besides making provision of confiscation of property abroad more stringent under FEMA.

READ ALSO: Govt goes on front foot over black-money case

While the other moves are meant to track unaccounted cash better, the SIT has also recommended setting up of five additional chief judicial magistrate courts in Mumbai for prosecution of 5,000 pending income tax cases.

2437 - 'Government working to get information on black money' - Hindustan Times

http://www.hindustantimes.com/India-news/NewDelhi/Government-working-to-get-information-on-black-money-President/Article1-824082.aspx

Indo-Asian News Service
New Delhi, March 12, 2012

The government had taken steps to open channels for wider information on black money from foreign countries, President Pratibha Patil said on Monday and stressed that automated delivery of public services with minimum human intervention was a key step towards reducing corruption.

In her address to the joint session of parliament at the beginning of budget session, the president said the unique Aadhaar (unique identification number) scheme would help improve service delivery, accountability, and transparency in social sector programmes.

The President, whose speech faced brief disruptions, listed the measures taken to curb black money. The issue of corruption and black money, which has dominated public discourse for over a year, found mention in the beginning of her speech.

She said the government has initiated action on enactment of Benami Transactions (Prohibition) Act and had commissioned studies to assess quantum of black money both inside and outside the country.

"We are taking many steps to contain the generation and outflow of illicit funds from the country and for opening channels for getting information on black money from other countries," the president said.

She said more than 97,000 common service centres had been established under the national e-governance programme for making public services conveniently available to citizens. She said electronic services delivery bill had been introduced in parliament.

"Efficient and automated delivery of public services with minimum human intervention is one of the keys to reducing corruption.... Departments responsible for income tax, passports, central excise and corporate affairs have started delivering online services...Increasingly, public services under all e-governance projects will be delivered through internet and mobile phones," she said and added that new e-governance projects in education, health, public distribution and postal services will be launched.

Referring to measures to fight corruption, Patil said legislations, including Lokpal and Lokayukta bill, whistleblowers protection bill, the prevention of bribery of foreign public officials bill, citizens's rights to grievances bill and judicial standards and accountability bill, had been introduced in Parliament.

She said India had also ratified the United Nations Convention against Corruption and a comprehensive public procurement law was being formulated.

"Together these have the potential of bringing about a transformational change in curbing corruption and enhancing transparency and accountability in governance," she said.

The President said the National Mission for Delivery of Justice and Legal Reforms had already been set up.

The President, who came to parliament in the traditional ceremonial procession, said the budget session marked the halfway mark of the United Progressive Alliance (UPA) government.

"I hope the session will be productive and useful," she said.