As deadline for disclosures passes, govt says Benami Act to be used widely against tax evaders
April will be the cruelest month for evaders of Benami laws as well as suspicious cash depositors during the demonetization period, as the government gears up to crack down after the deadline for disclosures under the Pradhan Mantri Garib Kalyan Yojna (PMGKY) ended Friday midnight.
The tax department has sent notices to 18 lakh people, including potentially fake entities whose cash transactions do not appear to be in line with their profile, asking for clarifications. Of these, more than 5 lakh persons could potentially face action under new Benami law. The Department has also identified 'advisers', who have played a crucial role in these suspicious transactions.
Over the last week of March, the Ministry of Finance and the Income tax Department worked on the newly refined illegal cash depositors' data to identify potential tax evaders and others against whom action could be taken under the new Benami Act-2016.
"We have finalised the data set of illegal cash depositors in the preview of Benami Act. The government has given them a chance under PMGKY, but they missed it," Finance Ministry officials who are familiar with the process, told DNA. They declined to be identified because of the secrecy involved in the operation.
The Finance Ministry has so far analysed about 80 bank accounts that saw about Rs 10 lakh crore in cash deposits during the demonetization period. New Delhi, sources said, has emerged as the leader with about Rs 31,000 cr, followed by Mumbai with almost half of that at Rs 16,000 cr.
The Ministry has sorted such cash depositors' data by bank and region. "We have pinpointed the potential evaders," a ministry official told DNA. "Our course of action will be against illegal cash depositors who defy the last chance of disclosure scheme of PMGKY, too". Officials are tallying the illegal cash depositors' data with the disclosures under PMGKY, and the responses of suspicious depositors who have been served notice under operation 'Clean Money' of the I-T Department.
Under the PMGKY, evaders could declare their amount in return for a 49.9 per cent tax rate and could have put another 25 per cent in a four-year interest-free deposit under PMGKY. They would have been allowed to retain the rest of the money, or about 25 per cent.
On November 1, 2016, just a week before demonetization was announced, the government amended the 28-year-old Benami Act 1988. A so-called benami (nameless) transaction includes the transfer of or holding of assets —property or cash, movable or immovable – by any person who has been paid to do so by someone else for their immediate or future, direct or indirect benefit. The amended act 'The Benami Transactions (Prohibition) Amendment Act, 2016' has provision to punish those who defy demonetization drive, too.
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