Govt bars co-op banks from accepting deposits under new tax amnesty scheme

21 Jan 2017


The government has barred cooperative banks from accepting deposits under the new tax amnesty scheme, Pradhan Mantri Garib Kalyan Yojana (PMGKY), 2016, amidst increasing evidence of misuse of cooperative institutions by tax evaders and black money holders.

The move follows the Income Tax department finding anomalies in deposits with various cooperative banks post demonetisation.

After 8 November scrapping of all Rs500 and Rs1,000 notes, the centre had come up with an amnesty scheme for holders of unaccounted cash by asking them to pay 50 per cent tax and parking one-fourth of it in a no-interest bearing four-year deposit.

This deposit could be made with any banks. But, now, cooperative banks have been barred from accepting such deposits. The PMGKY scheme is open till 31 March 2017.

''The deposit under this scheme shall be made by any person who declared undisclosed income under Pradhan Mantri Garib Kalyan Yojana, 2016. The deposit sum, which shall not be less than twenty-five per cent of the declared undisclosed income, can be deposited at the authorised banks (as notified by Government of India) from December 17, 2016 (Saturday) to March 31, 2017 (Friday),'' the earlier notification read.

''It is clarified that co-operative banks are not authorised banks to accept deposits under PMGKDS, 2016. Para 7 (1) of the notification stands amended as under: "Application for the deposit in the form of Bonds Ledger Account shall be received by any banking company, other than Co-operative Banks, to which the Banking Regulation Act, 1949, applies," the latest notification pointed out

Under the scheme, holders of unaccounted cash willing to avail the offer will have to first pay the tax amount and then fill up a challan form provided by the bank for availing the four-year deposit scheme.

The authorised banks have to electronically furnish the details of deposit to the revenue department on the next working day to enable information verification of the deposit before accepting the declaration under the PMGKY.

Full confidentiality of the data would be ensured by the RBI and authorised banks.

The I-T department's investigation revealed that deposits in the books of certain cooperative banks were in excess of the physical holding of the now-defunct 500 and Rs 1,000 rupees currency notes.

Initially cooperative banks were allowed to take deposits of old currency notes and as per estimates, about Rs16,000 crore was deposited. But six days into demonetisation, the RBI barred these banks from exchanging old currency notes or accepting deposits.

After the shock demonetisation of 500 and 1,000 rupee notes on November 8, the government had asked holders of such currency bills to deposit them in bank accounts by December 30. An estimated Rs 15.44 lakh crore worth such high denomination notes were in circulation.

While the RBI has not made it public the exact amount of junked notes that were deposited, there are reports that close to Rs15,00,000 crore has already come back.

The tax department, in order to crack down on money laundering, has asked banks to report deposits in any account aggregating Rs10 lakh in a year, as well as cash payments of Rs1 lakh or more on credit card bills.

Also banks have been asked to furnish data about deposits exceeding Rs2.5 lakh made during 9 November- 30 December period. They have also asked banks to collect PAN details of all account holders, except in case of Jan Dhan accounts.

Also it has come to the notice of the government that an estimated Rs 3-4 lakh crore of tax-evaded income could have been deposited during 50-day window that ended on 30 December.

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