After over a month of demonetisation in the country, the Centre is now planning to launch a multi-layered attack on tax-evaders as a part of Government’s post-December 31 plan. While asked about the plan of the incumbent NDA government, a senior BJP convener talked about a multi-layered investigation for exposing the names of tax-evaders and their unaccounted deposits.
“Only 4% of the entire population pays taxes, which is not sufficient to facilitate rest of the population,” the senior BJP leader claimed.
Despite of assuring on the pernicious effects of large black money, the Centre seems to be uncertain to keep its promise. Moreover, till now Prime Minister Narendra Modi-led government has come up with tangible policy action.
However, as per the Income Tax Amendment Act of November 28, 2016, the government will tax unaccounted income deposits at 50% and will only prosecute those who, upon investigation, are found to have engaged in illegal or criminal activity.
BJP feels that this move is hoped to motivate the transfer of wealth from the black economy to the banks. Since individual deposits will now be matched with their tax returns and unaccounted deposits will be taxed, this will yield a windfall for the government permitting large increases in social expenditures.
But, India is largely a cash-driven economy and the shortage of new currency notes and limits on withdrawals has led to considerable anxiety about wage and pension payments, and cash financing of even routine household expenditures.
Some economists have also strongly criticised the move as they think the process is inconvenient and it subjects many households to hardships. The frequent changes in the rules during the past month, over how money deposited into accounts will be taxed, how much money may be withdrawn and which exemptions, would apply across the country.
On the contrary, the government and the supporting political parties feel that the Indian economy will move towards digitization of economic transactions, with cash currency playing a relatively minor role.
They also argued that the policy is a significant fraction of the taxes and surcharges that will be collected from the reform initiative are to be allocated to social programs.