I-T suspects Rs4,00,000-cr black money in junked note deposits

The Income Tax Department suspects that at least Rs4,00,000 crore of the scrapped Rs500 and Rs1,000 notes deposited with banks across the country since the 8 November demonetisation announcement, could have come from those who dodged taxes.

Preliminary data available with the Income Tax Department shows that till 17 December, cash deposits of Rs80 lakh or more that flowed into 1.14 lakh bank accounts added up to nearly Rs4,00,000 crore.

Tax officials suspect that a large chunk of this amount could comprise dodged taxes. The department is currently in the process of verifying the genuineness of the deposits and tallying them with tax returns.

These officials say there is no way genuine taxpayers would keep wads of cash at home.

The I-T Department has already served around 5,000 notices to those who have deposited unusually large amounts of cash in banks.

The tax department is gearing up to serve notices to those who cannot explain the source of the money.

They say, many depositors were expecting to get away merely by depositing their cash hordes in banks.

"People thought the government would not do anything and kept depositing money. We have been analysing data on a weekly basis and we are going to act against those who have unaccounted money. Obviously, we want everyone to come forward and themselves pay taxes," said a senior official, adding that the government was hoping to earn "good revenue this year".

The government had already warned holders of unaccounted cash to declare these and pay up 50 per cent tax and that it was keeping a close watch.

Though the scheme is open till 31 March, they cannot pay in demonetised currency as the 30 December deadline got over on Friday.

Those who don't opt for the scheme, which is open till 31 March, will have to shell out around 90 per cent by way of taxes and penalties.

In all, nearly 6 million individuals and firms had made deposits of around Rs7,00,000 crore in old notes but these could include "institutional sources", which could be explained.

Separately, the I-T Department is also analysing data on deposits of as low as Rs30,000-40,000 deposited in Jan Dhan and dormant bank accounts (where there was no activity for a year or two).

Besides, I-T officials say, between 10 and 30 November, 1.77 lakh borrowers had repaid loans of over Rs25 lakh using old notes, which add up to nearly Rs50,000 crore. The list included companies and firms apart from individuals.

Similarly, the tax department, sources said, has come across instances where bank accounts that were not compliant with KYC norms saw deposits of over Rs1 crore.

Amidst the scramble to deposit old currency with banks, tax evaders have been looking for new ways to launder their unaccounted money. It was this that prompted government to come out with a new version of the Income Disclosure Scheme.

The misuse of Jan Dhan account, however, was limited as, according to tax authorities, the amount involved was not very large. Contrary to the expectation of widespread misuse of the no-frills accounts, a mere 34 saw deposits of Rs10 lakh or more with the highest deposit being Rs58 lakh.