Finance Minister Arun Jaitley said that just because large quantum of high denominational currency has been deposited with the banks does not render this money to be legitimate cash, adding revenue department would be entitled to tax this money.
Various estimates suggest almost Rs 15 lakh out of nearly Rs 15.44 lakh crore in high value demoentised notes has been deposited back with banks.
The RBI has said it is still in the process of double checking the numbers.
“Black money does not change its colour merely because it is deposited in bank. On the contrary, it loses its anonymity and can now be identified with its owner,” FM wrote in a Facebook blog taking stock after two months of demonetisation.
Most of money was anyway expected to come back after the government announced a declaration scheme.
“In any case, the amendment to the Income Tax Act itself provides that the said money, if voluntarily declared or if involuntarily detected, would be liable for differential and high rates of taxation and penalty,” Jaitley said.
He said queues outside the banks have disappeared and the remonetisation has moved ahead, and the impact on the economy would be transient.
Statistics office said on Friday that India’s economy will grow only 7.1% in FY17, down from 7.6% in the year before, but this does not include the impact of demonetisation.
Most experts expect growth to be even lower.
“Drop in economic activity on account of the currency squeeze during the remonetisation period would have a transient impact on the economy,” Jaitley said.
“The period of pain and inconveniences is getting over.”
He said all opinion polls conducted by independent media organizations have shown that an overwhelmingly large percentage of people have supported the Government’s decision. “There was no social unrest while implementing such a major decision.”
Oppositions’ exaggerated claims on the disruption of the economy have proved wrong, he said while hitting out at Congress party for adopting a political position, opposing both technology, change and reforms. “It (party) sided with black money friendly status quo.”
He said there was a marked difference in the approach of the Prime Minister and his opponents. “The Prime Minister was being futuristic, and thinking of a more modern, technology driven cleaner economy. He is now speaking of cleaning the political funding systems.”
“His opponents want a cash dominated, cash generating and cash exchange system to continue” he said.
“The difference between Prime Minister Narendra Modi and Rahul Gandhi was clear – the Prime Minister was thinking of the next generation while Rahul Gandhi was only looking at how to disrupt the next Session of Parliament.”