Prabhakar Sinha & Pradeep Thakur
The bill provides for even sterner punishment for those who are found to be in possession of “undisclosed inco me“ after the new scheme comes to an end. Those falling in this category will have to pay 82.5% of their unaccounted cash. The proposed fine marks more than a 50% increase in what has been laid down in the existing law.
The fine will go up to 95.4% for those whose declared income exceeds Rs 1 crore. Those below this threshold will be marginally better off and will be required to pay up to 90.9%.This is with regard to undisclosed income that comes to the notice of official agencies.
TOI had exclusively reported the creation of the PM’s welfare fund for the poor in its edition on Saturday .
The proposal to raise the fine, lock in 25% of the disclosed amount and put the money thus gained into the welfare scheme amplifies PM Narendra Modi’s political message that his decision to demonetise notes of Rs 500 and Rs 1,000 is meant to be a strike against those with hordes of illegal cash and will deliver tangible benefits for the poor. Finance minister Arun Jaitley on Monday intro duced a bill to amend the Income-Tax Act amid continuing disruptions over demonetisation in Parliament.
The bill is a money bill, with the BJP-dominated Lok Sabha having the decisive say in its passage. By all indications, the government will press for its passage swiftly , perhaps this week itself, if possible.
While there is no estimate of how much the government expects to mop up through the hike in fines and by “locking in“ 25% of the deposits, sources said that accruals will be substantial enough, going by the rush to deposit. With 32 days still to go, Rs 8 lakh crore in the scrapped currencies -over 57% of the total of about 14.5 lakh crore -has already flowed into the ever-bulging vaults of banks.
The fines may also help the government offset any shortfall in the estimate of “indi rect gain“ it hopes to make in case a chunk of the discarded currency does not come back at all.
The assumption here is that the higher the disappearance, the lower the liability of RBI to the holders of the scrapped currency notes: a scenario which can help the central bank to pass on the gain of the lower liability to the government in the form of higher or “special“ dividend.
Sources say the estimate of an impressive dividend from RBI was among the drivers of demonetisation, but the innovative “jugaad“ by “black money“ holders raised doubts over whether the amount to be gained this way will be the same as what was initially expected.
“Every exemption has been been used to launder black money ,“ said a senior government source, especially highlighting the role of many of the petrol pump operators in playing the money changer in return for commission as high as 30-35%.