Jaitley defends note ban, says objectives fulfilled

Source: The Hitavada      Date: 31 Aug 2017 08:10:56



Aug 30,


FINANCE Minister Arun Jaitley on Wednesday said that the aim of the demonetisation was to check the black money and corruption and not to seize people’s money. Reacting on the Reserve Bank of India’s report, released earlier in the day stating that 98.6 per cent of demonetised currency notes of Rs 1000 and Rs 500 returned to the central bank, Jaitley said that the step taken by the Government had not a single aim, but had many which has been fulfilled and visible in more collection of taxes.

He said the another objective was to promote digitisation and the cash exchange has reduced by 17 per cent. Government has been able to promote digital transactions. He said, demonetisation made people to even deposit their black money in their account which has been found in the data mining. As a result of data mining, a large number deposits have been found doubtful. A large number of notices have been sent to persons concerned in this regard. The Minister said that due to this, tax collection has increased by 25 per cent after demonetisation.

Even GST collection has surpassed the estimates, he stated. He said the fact that people were compelled to deposit black money in the banks is itself is a big success. Jaitley said that his next big step will be against the money used in elections. The Finance Minister said that he plans to ensure that money used in elections comes through the taxation system. He added that there was a decrease in the terror funding post demonetisation.On the Opposition reaction on RBI report, Finance Minister Jaitley said that people who never fought against black money, will never understand its importance.  

In a separate statement issued by the Finance Ministry, it said the aim of demonetisation was not confined to a single aim. The Government had decided to cancel the Legal Tender Status of Rs.1000 and Rs.500 denomination currency notes on 8th November 2016 with several objectives: (i) flushing out black money, (ii) eliminate Fake Indian Currency Notes (FICN), (iii) to strike at the root of financing of terrorism and left wing extremism, (iv) to convert non-formal economy into a formal economy to expand tax base and employment and (v) to give a big boost to digitalisation of payments to make India a less cash economy.

Scrutiny of about 18 lakh accounts, prima facie, did not appear to be in line with their tax profile. These were identified and have been approached through email/sms. More than 9.27 lakh responses were received giving information on 13.33 lakh accounts involving cash deposits of around Rs.2.89 lakh crore. Advance data analytics tools were deployed which further identified 5.56 lakh new cases and about 1 lakh of those cases in which either partial or no response was received in the earlier phase. Besides, about 200 high risk clusters of persons were identified for appropriate action.

The Income Tax Department conducted searches on various entities, leading to seizure of cash and admission of undisclosed income. Since November 2016 and until the end of May 2017, a total of Rs 1,7526 crore has been found as undisclosed income and Rs. 1003 crore has been seized.
It is further claimed that as a result of demonetisation drive, there is a substantial increase in the number of Income Tax Returns (ITRs) filed. The number of Returns filed as on 05.08.2017 registered an increase of 24.7per cent compared to a growth rate of 9.9 per cent in the previous year. Advance tax collections of Personal Income Tax (i.e. other than Corporate Tax) as on 05.08.2017 showed a growth of about 41.79 per cent over the corresponding period in F.Y. 2016-2017. Personal Income Tax under Self Assessment Tax (SAT) grew at 34.25 per cent over the corresponding period in F.Y. 2016-2017.

Transactions of more than 3 lakh registered companies are under the radar of suspicion while one lakh companies were struck off the list. The Government has already identified more than 37,000 shell companies which were engaged in hiding black money and hawala transactions. It further said that around 163 companies which were listed on the exchange platforms were suspended from trading, pending submission of proof documents. The Income-tax Directorates of Investigation have identified more than 400 benami transactions up to 23 May, 2017 and the market value of properties under attachment is more than Rs 600 crore.

The statement issued by the Finance Ministry after the RBI report further claimed that as a result of demonetization, terrorist and Naxalite financing stopped almost entirely. No high quality FICN was found / seized by Intelligence operations, including at the Indo-Bangladesh border since demonetisation. Further, it also adversely affected the hawala operators and dabba trading venues. Demonetisation drive led to significant change of saving habits and formalization of assets market. Considerably more funds came into the organized financial markets, whereas earlier households were parking much of their savings in unproductive physical assets. The savings in the form of investment in equity mutual funds, life insurance premia etc, increased.