Direct Tax Dispute Resolution Scheme- 2016 extended up to 31st January, 2017

In view of the representations received from various stakeholders and for the convenience of the taxpayers, the last date for availing the Direct Tax Dispute Resolution Scheme, 2016 (the Scheme) has been extended up to 31st January, 2017. The scheme was to close on 31st December, 2016.

In order to reduce the pending litigation, the Scheme was introduced by the Finance Act, 2016. The Scheme came into force from 1st June, 2016 vide notification S.O. 1902(E) dated 26th May, 2016.

The full text of the notification in this regard is available on the departmental website www.incometaxindia.gov.in.

Statement made by the Union Finance Minister Shri Arun Jaitley on Remonetisation and its impact.

Following is the transcription of the Statement made by the Union Finance Minister Shri Arun Jaitley on ‘Remonetisation and its impact’ to media today.

“On the November 8, the Prime Minister had asked for the country to support him notwithstanding several inconveniences being suffered by people during the remonetisation period.

We are extremely grateful to the people of India who have in very large measure supported the move. The remonetisation process has substantially advanced and what is significant is not a single incident of any form of unrest has been reported in the country.

The RBI has very large amounts of curreny available and it will continue to support the market to the extent that the market needs that kind of liquidity.

Amongst the currency which was in circulation on November 8, a very large part has already been replaced and would continue to be replaced to the extent that market requires that currency. More and more notes of Rs 500 are also being released through the banking and post offices and therefore we can see a lot of currency coming into recirculation which is enabling the banking system and the ATMs to further augument the supply itself. 

Already a large part of benefits of this historic move are visible. A lot more money has come into the banking system. Cash has an anonomity attached to it. Whats comes into the banking system gets identified with the person and therefore its impact on taxation and revenue collection is already being seen. 

The ability of the banks to lend has now increased. the revenue figures itself are more significant. We have till December 19, the direct tax figures of income tax which are now available and the net increase in the income tax so far has been to the extent of 14.4 per cent and if one factors in very large qunatums of refunds because these days refunds are also made immediately, the net increase is 13.6 per cent till 19th of December. 

The indirect tax figures are also available and not withstanding what the critics had predicted in all the categories till November 30 there is a significant increase in indirect taxation. In the central indirect taxes, the increase is 26.2 per cent till 30th November. And this includes excise duties increasing by 43.5 per cent, service tax increasing by 25.7 per cent and customs duties by 5.6 per cent. 

We have also tried to check up the figures for the month of November which could have been adversely impacted on account of the currency replacement compared to the November of 2015. On the year to year basis, the November of 2016 all the three indirect taxes, the collection is much high. 

We have also been trying to look at the figures of state governments for the acutal month of November which would be reported by the state governments only towards end of December.The increase or decrease is not very significant and in several areas which could have been impacted because of this move; For example in the field of agriculture, because we were also concerned that we should not cause any distress in the rural areas, the Rabi sowing ,overall for all crops, is 6.3 per cent higher than the last year. 

Now the Rabi crop sowing been higher than last year, life insurance businesses have increased, international tourism has increased, air passenger traffic has increased, petroleum consumption has increased, the flow into Mutual Funds has increased by 11 per cent. 

Of course there would be areas which would be adversely impacted, but what was predicted by the critics has to have rationale with the revenue collection. Assessment can be unreal but revenue is real. And therefore many of these indicate that now with the critical part of the remonetisation already behind us, and there being significant impact in large number of these areas, it should certainly be much better in the weeks and months to come than it was in last six weeks.”

Frequently Asked Questions (FAQs) on withdrawal of Legal Tender Character of the Old Bank Notes in the denominations of Rs 500/- and Rs 1,000 and replies there to.

Following are the Frequently Asked Questions (FQAs) related to the withdrawal of Legal Tender Character of the old Bank Notes in the denominations of Rs 500/- and Rs 1000/- and replies there to:

(Updated as on December 27, 2016)

1. Why is this Scheme introduced?

The incidence of fake Indian currency notes in higher denomination has increased. For ordinary persons, the fake notes look similar to genuine notes, even though no security feature has been copied. The fake notes are used for antinational and illegal activities. High denomination notes have been misused by terrorists and for hoarding black money. India remains a cash based economy hence the circulation of Fake Indian Currency Notes continues to be a menace. In order to contain the rising incidence of fake notes and black money, the scheme to withdraw has been introduced.

2. What is this Scheme?

The legal tender character of the existing bank notes in denominations of Rs 500 and Rs 1000 issued by the Reserve bank of India till November 8, 2016 (hereinafter referred to as Specified Bank Notes) stands withdrawn. In consequence thereof these Bank Notes cannot be used for transacting business and/or store of value for future usage. The Specified Bank Notes can be exchanged for value at any of the 19 offices of the Reserve Bank of India and deposited at any of the bank branches of commercial banks/ Regional Rural Banks/ Co-operative banks (only Urban Co-operative Banks and State Co-operative Banks) or at any Head Post Office or Sub-Post Office.

District Central Cooperative Banks (DCCBs) can allow their existing customers to withdraw money from their accounts up to Rs 24,000 per week. No exchange facility against the specified bank notes (Rs 500 and Rs 1000) or deposit of such notes should be entertained by DCCB’s. The Reserve Bank has accordingly advised all banks to permit withdrawal of cash by DCCBs from their accounts based on need.

3. Does the Scheme apply to pre 2005 banknotes of Rs 500 and Rs 1000?

Yes, specified banknotes (SBN) include pre 2005 banknotes in the denominations of Rs 500 and Rs 1000. Banks should accept deposits of pre-2005 bank notes in the denominations of Rs 500 and Rs 1000 under the scheme. However, these notes can be exchanged at RBI Offices only.

4. How much value will I get?

You will get value for the entire volume of notes tendered at the bank branches / RBI offices.

5. Can I get all in cash?

The Scheme does not provide for it, given its objectives. You can use balances in bank accounts to pay for other requirements by cheque or through electronic means of payments such as Internet banking, mobile wallets, IMPS, credit/debit cards etc.

6. Can I get cash in exchange for specified banknotes over the bank counter?

No. Over the counter exchange (in cash) of SBNs is not permitted from November 25, 2016. Members of public who approach the banks for over the counter exchange of SBN are encouraged to deposit SBNs into their bank accounts. Banks have been advised to facilitate opening of new accounts for unbanked people.

7. What if I don’t have any Bank Account?

You can always open a bank account by approaching a bank branch with necessary documents required for fulfilling the KYC requirements.

8. What if, if I have only JDY account?

A JDY account holder can avail the deposit facility subject to the caps and other laid down limits in accord with norms and procedures.

With a view to protect the innocent farmers and rural account holders of PMJDY from activities of money launders and legal consequences under the Benami Property Transaction & Money Laundering laws, it has been decided to place certain limits, as a matter of precaution, on the operations in the PMJDY accounts funded through deposits of Specified Bank Notes (SBNs) after November 09, 2016. As a temporary measure, the banks have been advised that:

1. Fully KYC complaint account holders may be allowed to withdraw Rs 10,000/- from their account, in a month. The branch managers may allow further withdrawals beyond Rs 10,000 within the current applicable limits only after ascertaining the genuineness of such withdrawals and duly documenting the same on bank’s record.
2. Limited or Non KYC compliant account holders may be allowed to withdraw Rs 5,000 per month from the amount deposited through SBNs after November 09, 2016 within the overall ceiling of Rs 10,000.

9. Where can I go to exchange the notes?

The exchange facility has been stopped at bank branches with effect from November 25, 2016.

10. Should I go to bank personally for deposit or can I send the notes through my representative?

Personal visit to the branch is preferable. In case it is not possible for you to visit the branch you may send your representative with an express mandate i.e. a written authorisation. The representative should produce authority letter and his / her valid identity proof while tendering the notes.

In case you want to go to a branch of any other bank where you are not maintaining an account, you will have to furnish valid identity proof and bank account details required for electronic fund transfer to your account.

11. Can I withdraw from ATM?

The ATMs are progressively getting recalibrated. As and when they are recalibrated, the cash limit of such ATMs will stand enhanced to Rs 2500/- per day. This will enable dispensing of lower denomination currency notes for about Rs 500/- per withdrawal. Other ATMs which are yet to be recalibrated, will continue to dispense Rs 2000/- till they are recalibrated.

Banks have also been advised to increase the Business Correspondents’ limit of dispensing cash to Rs 2500/- for withdrawal from bank accounts.

12. What will be the levied ATM charges?

It has been decided that banks shall waive levy of ATM charges for all transactions (inclusive of both financial and non-financial transactions) by savings bank customers done at their own banks’ ATMs as well as at other banks’ ATMs, irrespective of the number of transactions during the month. This waiver is applicable on transactions done at ATMs from November 10, 2016 till December 30, 2016, subject to review.

13. Does the limit of Rs 24000 withdrawal apply to withdrawals from bank account of one bank from another bank?

These limits are not applicable to cash withdrawal from a bank account by one bank from another bank, Post Office, Money changers operating at International airports and operators of White Label ATMs. The branches maintaining Currency Chests have been advised to accommodate the requests from other branches in their vicinity – linked or otherwise – for supply of cash.

14. Can I withdraw cash against cheque?

Yes, you can withdraw cash against withdrawal slip or cheque subject to a weekly limit of Rs 24000/- (including withdrawals from ATMs and over the counter) from the bank accounts.

Business entities having Current Accounts which are operational for last three months or more will be allowed to draw Rs 50,000/-per week. This can be done in a single transaction or multiple transactions. This facility has been extended to Overdraft and Cash Credit accounts and traders registered with the Agricultural Produce Market Committee (APMC) markets or mandis. Accordingly, holders of current / overdraft / cash credit accounts, which are operational for the last three months or more, may withdraw up to Rs 50000 in cash, in a week. Such withdrawals may be disbursed predominantly in Rs 2000 denomination bank notes. This enhanced limit for weekly withdrawal is not applicable for personal overdraft accounts. Farmers are allowed to draw up to Rs 25000/- per week in cash from their loan (including Kisan Credit Card limit) or deposit accounts subject to their accounts being compliant with the extant KYC norms.

15. Can I withdraw a higher amount for the purpose of my ward’s wedding?

With a view to enable members of the public to perform and celebrate weddings of their wards it has been decided to allow a cash withdrawal of maximum Rs 250000/- from their bank deposit accounts till December 30, 2016 out of the balances at credit in the account as at close of business on November 08, 2016 to meet wedding related expenses. This is subject to the following conditions:

• Withdrawals are permitted only from fully KYC compliant accounts.
• The amounts can be withdrawn only if the date of marriage is on or before December 30, 2016.
• Withdrawals can be made by either of the parents or the person getting married. (Only one of them will be permitted to withdraw).
• Since the amount proposed to be withdrawn is meant to be used for cash disbursements, it has to be established that the persons for whom the payment is proposed to be made do not have a bank account.
• The application for withdrawal shall be accompanied by following documents:

An application as per the format

Evidence of the wedding, including the invitation card, copies of receipts for advance payments already made, such as Marriage hall booking, advance payments to caterers, etc.

A detailed list of persons to whom the cash withdrawn is proposed to be paid, together with a declaration from such persons that they do not have a bank account, where the amount proposed to be paid is Rs 10,000/- or more. The list should indicate the purpose for which the proposed payments are being made.

Banks may keep a proper record of the evidence and produce them for verification by the authorities in case of need. The scheme will be reviewed based on authenticity/ bona fide use thereof. Yet, banks should encourage families to incur wedding expenses through non-cash means viz. cheques /drafts, credit/debit cards, prepaid cards, mobile transfers, internet banking channels, NEFT/RTGS, etc. Therefore, members of the public should be advised, while granting cash withdrawals, to use cash to meet expenses which have to be met only through cash mode.

16. What is being done for the farmers?

Farmers are allowed to draw up to Rs 25000/- per week in cash from their loan (including Kisan Credit Card limit) or deposit accounts subject to their accounts being compliant with the extant KYC norms. Specified banknotes in the denomination can be used for making payments towards purchase of seeds from the Centres, units or outlets belonging to the Central or State Governments, Public Sector Undertakings, National or State Seeds Corporations, Central or State Agricultural Universities and the Indian Council of Agricultural Research, on production of proof of identity.

Towards ensuring unhindered farming operations during the Rabi crop season, NABARD would be utilizing its own cash credit limits up to about Rs 23,000 crore to enable the DCCBs to disburse the required crop loans to PACS and farmers. Banks with currency chests have been advised to ensure adequate cash supply to the DCCBs and RRBs. Adequate cash supply should also be ensured for rural branches of all commercial (including RRBs). Bank branches located in APMCs may also be given adequate cash to facilitate smooth procurement.

17. Can I deposit Specified Bank Notes through ATMs, Cash Deposit Machine, cash Recycler and bank branches multiple times?

Yes, Specified Bank Notes can be deposited in Cash Deposits machines / Cash Recyclers or at bank branches more than once till December 30, 2016. At bank branches, customers should use separate pay-in-slips for depositing specified bank notes and other legal tender bank notes.(If a depositor has a mixed bunch of SBN and legal tender notes, he has to segregate them and submit two separate Pay-in slips).

18. Can I make use of electronic (NEFT/RTGS /IMPS/ Internet Banking / Mobile banking etc.) mode?

You can use NEFT/RTGS/IMPS/Internet Banking/Mobile Banking or any other electronic/ non-cash mode of payment. In order to meet the transactional needs of the public through digital means, additional measures have been introduce by way of special dispensation for small merchants and enhancement in limits for semi-closed Prepaid Payment Instruments (PPIs).

PPIs issuers can issue PPIs to such merchants. While balance in such PPIs cannot exceed Rs 20,000/- at any point of time, the merchants can transfer funds from such PPIs to their own linked bank accounts up to Rs 50,000/- per month, without any limit per transaction. Merchants only need to provide a self-declaration in respect of their status and details of their bank account.

The limit of semi-closed PPIs issued with minimum details has been enhanced to Rs 20,000/- from the existing Rs 10,000/-. The total value of reloads during any given month has also been enhanced to Rs 20,000/-.

Extant instructions for other categories of PPIs remain unchanged. Full KYC PPIs with balance upto ₹1,00,000/- can continue to be made available by authorised PPI issuers. The above measures will be effective from November 21, 2016 till December 30, 2016, subject to review.

Relaxation in Additional Factor of Authentication (AFA) for payments upto Rs 2000/- for card network provided authentication solutions has been permitted for the Card Not Present (CNP) transactions. For details please refer RBI DPSS circular dated December 6, 2016.

19. I am right now not in India, what should I do?

If you have Specified banknotes in India, you may authorise in writing enabling another person in India to deposit the notes into your bank account. The person so authorised has to come to the bank branch with the Specified banknotes, the authority letter given by you and a valid identity proof (Valid Identity proof is any of the following: Aadhaar Card, Driving License, Voter ID Card, Pass Port, NREGA Card, PAN Card, Identity Card Issued by Government Department, Public Sector Unit to its Staff)

20. I am an NRI and hold NRO account, can the exchange value be deposited in my account?

Yes, you can deposit the Specified banknotes to your NRO account.

21. I am a foreign tourist, how much Indian currency can I get after the announcement of withdrawal of legal tender status for specified banknotes?

Foreign citizens will be permitted to exchange foreign currency up to Rs 5000 per week. Necessary entry to this effect will be made in their passports.

22. I have emergency needs of cash (hospitalisation, travel, life saving medicines) then what I should do?

Exemptions for the use of specified banknotes have been discontinued with effect from December 16, 2016

23. Can I deposit the Specified banknotes to my account?

Deposits of Specified bank Notes into all types of deposit/loan accounts of Public Sector Banks/ Private Sector Banks / Foreign Banks/Regional Rural Banks / Urban Cooperative Banks/ State Cooperative Banks is allowed subject to CTR/STR reporting. Certain restrictions have been imposed on deposits of SBNs into non KYC compliant bank accounts as indicated below:

Tenders of SBNs in excess of Rs 5000 into a non KYC compliant bank account will be received for credit only once during the remaining period till December 30, 2016. The credit in such cases shall be afforded only after questioning tenderer, on record, in the presence of at least two officials of the bank, as to why this could not be deposited earlier and receiving a satisfactory explanation. The explanation will be kept on record to facilitate an audit trail at a later stage.

Even when tenders smaller than Rs 5000 are made in a non KYC compliant bank account and such tenders taken together on cumulative basis exceed Rs 5000 they may be subject to the procedure to be followed in case of tenders above Rs 5000, with no more tenders being allowed thereafter until December 30, 2016.

The above restrictions shall not apply to tenders of SBNs for deposits in KYC compliant account and deposits under the Taxation and Investment Regime for the Pradhan Mantri Garib Kalyan Yojana, 2016

The equivalent value of specified bank notes tendered will be credited to an account maintained by the tenderer at any bank in accordance with standard banking procedure and on production of valid proof of Identity.

The equivalent value of specified bank notes tendered may be credited to a third party account, provided specific authorisation therefor accorded by the third party is presented to the bank, following standard banking procedure and on production of valid proof of identity of the person actually tendering, as indicated in Annex-5 of our circular DCM (Plg) No.1226/10.27.00/2016-17 dated November 08, 2016

Anybody depositing more than Rs 50,000/- in cash in their bank account has to submit a copy of the PAN card in case the bank account is not seeded with PAN.

24. Can I deposit SBN to Small Savings Scheme?

Government of India has decided that subscribers of Small Savings Schemes may not be allowed to deposit SBNs in Small Savings Schemes. Banks have been advised not to accept SBNs for deposits in Small Saving Schemes with immediate effect. However deposits into Post Office Savings account are permitted

25. What is proof of identity?

Valid Identity proof is any of the following: Aadhaar Card, Driving License, Voter ID Card, Pass Port, NREGA Card, PAN Card, Identity Card Issued by Government Department, Public Sector Unit to its Staff.

26. Where can I get more information on this scheme?

Further information is available on our website (www.rbi.org.in) and the website of the Government of India (www.finmin.nic.in)

27. What steps have been taken for queue management?

Banks have been advised to make arrangements for separate queues for Senior citizens and Divyang (disabled) persons. Similarly, separate queues should also be arranged for those who come to exchange SBN for cash and those who come to deposit into bank accounts.

The last date for submission of the annual life certificate for the government pensioners which is to be submitted in November every year has been extended upto January 15, 2017 to facilitate.

The Reserve Bank assures members of the public that enough cash in small denominations is also available at the Reserve Bank and banks. The Reserve Bank urges that public need not be anxious; need not come over to banks repeatedly to draw and hoard; Cash is available when they need it.

Also see:

All You wanted to know from RBI about: Withdrawal of Legal Tender Status of Rs 500 and Rs 1000 Notes

28. If I have a problem, whom should I approach?

You may approach the control room of RBI by email or on Telephone Nos 022 22602201/022 22602944

29. Can payments towards tax, penalty, surcharge and deposit under PMGKY be made in SBNs?

The Central Government has decided that up to 30.12.2016, the payment towards tax, surcharge, penalty and deposit under the Pradhan Mantri Garib KalyanYojana (PMGKY), can be made in Old Bank Notes of Rs 500 and Rs 1,000 denomination issued by the RBI. The Taxation and Investment Regime for Pradhan Mantri Garib KalyanYojana (PMGKY), 2016 has commenced on 17th December, 2016 and is open for declarations upto 31st March, 2017. The payment of tax, surcharge and penalty under the Scheme is to be made through challan ITNS- 287 and the deposits are to be made in the Pradhan Mantri Garib Kalyan Deposit Scheme, 2016. The notifications relating to PMGKY are available on the website www.incometaxindia.gov.in

Payments towards Tax, Penalty, Surcharge and Deposit under PMGKY 2016 in Old Demonetised Currency allowed till 30th December, 2016.

The Central Government has decided that up to 30.12.2016, the payment towards tax, surcharge, penalty and deposit under the Pradhan Mantri Garib KalyanYojana (PMGKY), can be made in Old Bank Notes of Rs. 500 and Rs.1,000 denomination issued by the RBI.

The Taxation and Investment Regime for Pradhan Mantri Garib KalyanYojana (PMGKY), 2016 has commenced on 17thDecember, 2016 and is open for declarations upto 31st March, 2017. The payment of tax, surcharge and penalty under the Scheme is to be made through challan ITNS- 287 and the deposits are to be made in the Pradhan Mantri Garib Kalyan Deposit Scheme,2016. The notifications relating to PMGKY are available on the website www.incometaxindia.gov.in

Income Tax Department Identifies 67.54 lakh Potential Non-Filers for F.Y. 2014-15

The Non-filers Monitoring System (NMS) was rolled out for identification of non-filers with potential tax liabilities. Data analytics carried out by the Systems Directorate of Central Board of Direct Taxes (CBDT) identifies non-filers about whom specific information is available in the AIR, CIB and TDS/TCS databases.

The Income Tax Department has conducted the fifth cycle of data matching which has identified an additional 67.54 lakh potential non-filers who have carried out high value transactions in the financial year 2014-15 but did not file return of income for the relevant assessment year i.e. A.Y 2015-16. The information relating to the identified non-filers has been made available in the ‘Compliance Module’ on the e-filing portal of the Income Tax Department. The information will be visible only to the specific PAN holder when they log into the e-filing portal at https://incometaxindiaefiling.gov.in. The PAN holder will be able to respond electronically and retain a copy of the submitted response for record purpose.

While the Government urges all tax payers to disclose their true income and pay taxes accordingly, the Department would continue to pursue the non-filers vigorously till all the high potential non-filers are covered.

Government decides to reduce the existing rate of deemed profit under section 44AD of the Income Tax Act in respect of amounts/receipts through banking channel/digital means

Under the existing provisions of section 44AD of the Income-tax Act, 1961 (the Act), in case of certain assesses (i.e. an individual, HUF or a partnership firm other than LLP) carrying on any business (other than transportation, agency, brokerage and commission) and having a turnover of Rupees Two Crore or less, the profit is deemed to be 8% of the total turnover.

In order to achieve the Government’s mission of moving towards a less cash economy and to incentivise small traders / businesses to proactively accept payments by digital means, it has been decided to reduce the existing rate of deemed profit of 8% under section 44AD of the Act to 6% in respect of the amount of total turnover or gross receipts received through banking channel / digital means for the financial year 2016-17. However, the existing rate of deemed profit of 8% referred to in section 44AD of the Act, shall continue to apply in respect of total turnover or gross receipts received in cash.

Legislative amendment in this regard shall be carried out through the Finance Bill, 2017.

Amounts exceeding Rs.5000 in old notes can be deposited only once between now and 30th December, 2016

The deposits of old notes of Rs.500 and Rs.1000 denominations have been reviewed by the Government from time to time. Already more than five weeks have elapsed since the time of the announcement of the cancellation of the legal tender character of these notes. It is expected that, by now, most of the people would have deposited such old notes in their possession. Keeping this in view and to reduce the queues in the banks, it has now been decided that amounts exceeding Rs.5000 in old notes can be deposited only once between now and 30th December, 2016. The banks have been advised to conduct due diligence regarding the reasons for not depositing these notes earlier. Amounts of Rs.5000 or less may continue to be deposited with banks in the customer’s account, as at present. However, cumulative deposits exceeding Rs.5000 between 19th and 30th December, 2016 will be as per the procedures advised by RBI in respect of deposits exceeding Rs.5000 as stated above.

Further, an opportunity has been given to the public to make the payments towards tax, penalty, cess/surcharge and deposit under the Pradhan Mantri Garib Kalyan Yojana (PMGKY) 2016 with the old bank notes of Rs.500 and Rs.1000 denomination upto 30th December, 2016.

A number of representations had been received from District Cooperative Central Banks (DCCBs) to allow them to deposit with their linked currency chests the old Rs.500 and Rs.1000 notes that had been collected by them between the 10th of November and 14th of November, 2016. An enabling notification to this effect has been issued. NABARD which supervises the DCCBs will conduct complete audit check of the Know Your Customer (KYC) documents of the individual customers who have deposited these notes or of the members of the Primary Agricultural Credit Society (PACS) who have deposited these notes. The details in this regard will be notified by RBI.

Clarification of Status of Political Parties under Income Tax Act, 1961

There have been some newspaper reports which seem to wrongly suggest that there cannot be any scrutiny of Income-tax returns of political parties registered with the Election Commission in the context of deposits of old currency notes. This inference seems to have been drawn because of the fact that the income of the political parties is exempt from Income - Tax under Section 13A. 

In this context, the following clarifications need to be kept in mind :

• The exemption from Income-Tax is given to only registered political parties subject to certain conditions, which are mentioned in Section 13A, which includes keeping and maintaining books of accounts and other documents as would enable the Assessing Officer to deduce its income therefrom;
• In respect of each voluntary contribution in excess of Rs. 20000, the political party will have to maintain a record of such contributions along with the name and address of such person who has made such contribution;
• The accounts of each such political party is to be audited by a Chartered Accountant; and
• The political party has to submit a report to the Election Commission about the donations received within a timeframe prescribed.

There are enough provisions in the Income Tax Act to scrutinise the accounts of the political parties and these political parties are also subject to other provisions of Income-Tax, including filing of return.

Statement by Finance Minister Shri Arun Jaitley

Following is the statement by Union Minister for Finance and Corporate Affairs Shri Arun Jaitley: 

"Political parties have not been granted any exemption post demonetisation and introduction of Taxation Laws (Second Amendment) Act, 2016 which came into force on 15th December, 2016. 

Income & Donations of political parties fall in the purview of Section 13A of the Income Tax Act 1961 & there is no change in its provisions. In this era of instant outrage, a 35 year old law is presented as a new law being passed by the NDA Government. 

I implore all journalist friends to be fully outraged against any step of the Government, if it is not against corruption. But in equal measure, I would also implore them to do adequate research before jumping the gun. 

Under Section 13A of IT Act 1961, Political parties have to submit audited accounts, income & expenditure details and balance sheets. 

Post demonetisation, no political party can accept donations in 500 and 1000 rupee notes since they were rendered illegal tenders. Any party doing so would be in violation of law. 

Just like anyone else, political parties can also deposit their cash held in the old currency in banks till the 30th of December provided they can satisfactorily explain the source of income and their books of accounts reflect the entries prior to 8 November. 

If there is any discrepancy in the books or records of political parties, they are as liable to be questioned by the Income Tax authorities as is anyone else. They enjoy no immunity whatsoever. 

There is no question of sparing anyone, and the political class is no exception. Infact PM Modi is setting a new example of propriety in public life, by asking all MPs & MLAs of BJP to submit their bank account details post demonetization. We would like to urge the other parties to do the same and prove their intentions against corruption."

Income Tax Searches lead to Admission of Undisclosed Incomes of Rs. 2600 Crore since 8th November, 2016.

The Income Tax Department has continuously been carrying out investigations since the de-monetisation of Old High Denomination (OHD) currency announced by the Government on 8th November, 2016. While Searches have been carried out in 291 cases across the country, 295 cases have been covered by survey action. In addition to these, open enquiries have been effected in more than 3000 cases. Approximately Rs. 393 Crore including Rs. 316 Crore cash and Rs. 77 Crore worth of jewellery has been seized. Of the cash seizure, about Rs. 80 Crore is in new currency. As a result of these investigations, approximately Rs. 2600 Crore of undisclosed income has been admitted by the taxpayers.

The success of the Department in unearthing undisclosed incomes and detecting large scale malpractices is due to its focused enforcement actions based upon high quality data analytics under various categories thereby identifying and prioritizing high risk persons/groups. This, coupled with the professional manner of conducting the investigations in a swift and confidential manner, has helped the Department make an impact in a short time.

Filing of Revised Income Tax Returns by the Tax Payers Post De-Monetisation of Currency

Under the existing provisions of Section 139(5) of the Income-tax Act, 1961 (‘Act’), Revised Return can only be filed if any person, who has filed a return under Section 139(1) of the Act or in response to notice u/s 142(1), discovers any omission or any wrong statement therein. Post demonetization of the currency on 8th November, 2016, some taxpayers may misuse this provision to revise the return-of-income filed by them for the earlier assessment year, for manipulating the figures of income, cash-in-hand, profits etc. with an intention to show the current year’s undisclosed income (including the unaccounted income held in the form of demonetized currency in current year) in the earlier return.

It is hereby clarified that the provision to file a revised return of income u/s 139(5) of the Act has been stipulated for revising any omission or wrong statement made in the original return of income and not for resorting to make changes in the income initially declared so as to drastically alter the form, substance and quantum of the earlier disclosed income.

It is brought to the notice of tax payers that any instance coming to the notice of Income-tax Department which reflects manipulation in the amount of income, cash-in-hand, profits etc. and fudging of accounts may necessitate scrutiny of such cases so as to ascertain the correct income of the year and may also attract penalty/prosecution in appropriate cases as per provision of law.

Source:

Press Information Bureau
Government of India
Ministry of Finance

Direct and Indirect Tax Collections up to November, 2016

Direct Taxes

The figures for direct tax collections up to November, 2016 show that net collections are at Rs. 4.12 lakh crore which is 15.12% more than the net collections for the corresponding period last year. Till November, 2016,48.67% of the Budget Estimates of direct taxes for FY 2016-17 has been achieved. 

As regards the growth rates for Corporate Income Tax (CIT) and Personal Income Tax (PIT), in terms of gross revenue collections, the growth rate under CIT is 11.22% while that under PIT (including STT) is 22.41%.However, after adjusting for refunds, the net growth in CIT collections is 8.75% while that in PIT collections is 23.89%. Refunds amounting to Rs.1,05,561 crore have been issued during April-November, 2016, which is 17.35% higher than the refunds issued during the corresponding period last year

Indirect Taxes

The figures for indirect tax collections (Central Excise, Service Tax and Customs) up to November 2016 show that net revenue collections are at Rs 5.52 lakh crore, which is 26.2% more than the net collections for the corresponding period last year. Till November 2016, 71.1% of the Budget Estimates of indirect taxes for Financial Year 2016-17 has been achieved.

As regards Central Excise, net tax collections stood at Rs. 2.43 lakh crore during April-November, 2016 as compared to Rs.1.69 lakh crore during the corresponding period in the previous Financial Year, thereby registering a growth of 43.5%.

Net Tax collections on account of Service Tax during April-November, 2016 stood at Rs. 1.60 lakh crore as compared to Rs.1.27 lakh crore during the corresponding period in the previous Financial Year, thereby registering a growth of 25.7%.

Net Tax collections on account of Customs during April-November 2016 stood at Rs. 1.48 lakh crore as compared to Rs. 1.40 lakh crore during the same period in the previous Financial Year, thereby registering a growth of 5.6%.

During November 2016, the net indirect tax (with ARM) grew at the rate of 23.1% compared to corresponding month last year. The growth rate in net collection for Customs, Central Excise and Service Tax was 16.1%, 33.7% and 15.5% respectively during the month of November, 2016, compared to the corresponding month last year. However, the total indirect tax collection (with ARM) for the month of November 2016 showed a decline of 13.9% over October 2016 figures.

The net indirect tax collection up-to November, 2016 shows a growth of 26.2% (with ARM) and 8.0% (without ARM) over the corresponding period of previous year. This growth rate up-to October, 2016 was 26.7% (with ARM) and 8.0 % (without ARM).

The month-wise cumulative indirect tax growth trends (without ARM) in FY 2016-17 is shown below.

In order to facilitate the move towards cashless transactions, the Government has directed the banks to install an additional one million new PoS terminals by 31st March 2017;. 2,73,919 camps organized to open banks accounts for unorganized labour in which 24.54 lakh accounts opened.

As part of the plan to expand the digital payments eco-system and facilitate the move towards cashless transactions, the Government has decided that an additional one million new PoS terminals should be installed by 31st March 2017. Towards this end, banks have already placed orders for 6 lakh PoS machines and another 4 lakh PoS machines are likely to be ordered in the next few days. The country today has about 15 lakh PoS terminals across different merchants to facilitate card based payments.

A special drive has also been undertaken jointly with Ministry of Labour & Employment and States’ Administration to open banks accounts for unorganized labour by holding camps at various locations. A total of 2,73,919 camps have been organized so far in which 24.54 lakh accounts have been opened.

In the light of the Government’s decision to demonetize Specified Bank Notes w.e.f. the midnight of 8th November 2016, banks are making all out efforts to facilitate genuine transactions. Appropriate action is being taken against individuals involved in irregular and unauthorized activities. Since 3rd December 2016, action against 7 officials of Public Sector Banks (PSBs) have been taken.

In addition, audit has been taken-up in few branches of Public Sector Banks (PSBs). The Concurrent Audit is also being initiated as per the requirement and under the extant guidelines of RBI.

Income Tax (IT) Department carries-out swift investigations in more than 400 cases since the de-monetization of old High Denomination (OHD) currency on 8th November, 2016; More than Rs. 130 crore in cash and jewellery seized and approximately Rs. 2,000 crore of Undisclosed Income admitted by the taxpayers; IT Department refers large number of cases with serious irregularities detected Post De-monetization to Enforcement Directorate (ED) & CBI.

The Income Tax Department has carried-out swift investigations in more than 400 cases since the de-monetization of Old High Denomination (OHD) currency announced by the Government on 8th November, 2016. More than Rs. 130 Crore in cash and jewellery has been seized and approximately Rs.2000 Crore of undisclosed income has been admitted by the taxpayers.

Detecting serious irregularities beyond the Income-tax Act, the CBDT decided to refer such cases to the ED and the CBI, enabling them to examine the criminal conduct for immediate necessary action. More than 30 such references have already been made to the ED, and are being sent to the CBI.

The Bengaluru Investigation Unit of the Income Tax Department has sent maximum references (18) to ED. These are cases where undisclosed cash in new high denomination notes was seized by the Department. The Mumbai unit has referred a case where Rs. 80 lakh in new high denomination currency notes were seized. Ludhiana Unit has referred 2 cases, where seizures of USD 14000 and Rs. 72 lakh in cash were made. Hyderabad, shared a case involving seizure of Rs. 95 lakhs cash from 5 persons travelling in a Tata Indica. Pune’s reference stems from a seizure of Rs. 20 lakhs cash, including 10 lakhs in new currency notes from an un-allotted locker of urban cooperative bank, the key of which was in the possession of the CEO of the bank. Two cases referred by the Bhopal unit are of jewelers against whom evidence of large scale pre-dating of bills and flouting of PAN reporting norms were detected during searches conducted. The cases referred from the Delhi unit include the Axis Bank, Kashmiri Gate in which complicity of officers of the bank in the malpractices was detected.

The concerted and coordinated enforcement action of the Income Tax Department, ED & CBI in detecting the malpractices and taking swift action is going to continue in the coming days.