We have all entered 2017, and demonetisation
has tagged along for better or worse. Before we welcomed the New Year in, Prime Minister Narendra Modi addressed the nation as his 50-day period of "pain" over the sudden drive ended, and he likened the perseverance shown by the people to Mahatma Gandhi’s Champaran satyagraha
of 1917. (Read more )
Meanwhile, NITI Aayog Vice-Chairperson Arvind Panagariya has expressed the first note of concern, over the manner in which the unaccounted wealth have been unearthed.
Panagariya has written a letter to the Prime Minister's Office, according to the Indian Express
, warning against people being harassed by tax authorities in the wake of having deposited their old notes between November 8 and December 30. Panagariya has advised that tax rules need to be codified in the wake of demonetisation.
Citing government sources, the national daily reported that Panagariya has suggested that on deposits of up to Rs 2.5 lakh, there should be no questions asked. His advise comes in context: On December 15, the government asked banks and post offices to report to the I-T Department all deposits above Rs 2.50 lakh in savings accounts, and more than Rs 12.50 lakh in current accounts, made during the 50-day window provided to tender the scrapped Rs 500 and Rs 1,000 rupee notes. Banks and post offices now have to file a statement of financial transaction in respect of these transactions on or before January 31, 2017, the notification said. Earlier, they were required to report to the I-T Department only when cash deposits in an account exceeded Rs 10 lakh in one full year. Further, the government announced that accounts with deposits more than Rs 2 lakh since demonetisation
started and a total balance greater than Rs 5 lakh would not be permitted withdrawals or transfer of funds without quoting of permanent account number (PAN) or, if a person does not possess his or her PAN, then after the submission of Form 60. ( Read More
Another thing weighing on people's minds would be that tax authorities, according to the Economic Times
, will be sifting through the data collected since the commencement of demonetisation to identify people who might have deposited cash or made high value purchases which were not in line with their income declared in tax returns, and subsequently such names will be made public and the people concerned will have to explain these anomalies. Further, in the process, even deposits below Rs 2.5 lakh could come under the scanner.
Writing for the Business Standard, Karvy Private Wealth CEO Abhijit Bhave explains: "Deposits of old high-value denomination notes in banks are estimated at Rs 14 lakh crore (out of the Rs 15.44 lakh crore withdrawn on November 8), not leaving much in terms of unaccounted (black) money. However, higher deposits may have brought, wittingly or unwittingly, more people under the lens of the banks, and by extension the Taxman." (Read more)
Another area of focus for Panagariya is some form of consideration for women over the deposits they have made in banks during the 50-day period since November 8. According to Indian Express
, he suggested that here should be a "generous" formula or method for determining the annual savings of such women. The reason is simple, it is considered conventional wisdom that housewives in India often set aside a portion of their husbands’ salaries, which become secret savings in cash and can be used in a pinch. The Demonetisation drive would have compelled women to have deposited such personal savings in the banks. Panagariya has argued, according to the national daily, that such savings could be substantial given the time period they have been accumulated over, thereby perhaps exceeding the current limits till which the government allows deposits without any question. Further, particular focus on women is significant given that the government has proposed to levy a total tax, penalty and surcharge of 50 per cent on the amount of black money deposited by a person, given that he or she discloses the amount to be untaxed wealth, in banks since the demonetisation drive began. Further, higher taxes and stiffer penalty of up to 85% await those who don't disclose untaxed wealth but are caught.