Income Tax dept to follow-up with over 1 million taxpayers on high-value deposits


New Delhi: The income tax (I-T) department will issue follow-up letters to more than 1 million taxpayers who have failed to respond to its missives to explain high-value cash deposits in bank accounts between 9 November and 30 December.

As part of Operation Clean Money, to begin with, the department had sent e-mails and text messages to 1.8 million individuals—those whose cash deposits in bank accounts exceeded Rs5 lakh as well as those with suspicious deposits between Rs3 lakh and Rs5 lakh. It asked these individuals to log into the department’s e-filing website and answer questions relating to the cash deposits, totalling more than Rs4.5 trillion.

However, so far, only a little over 700,000 people have responded on the e-filing website.

The poor response is compounded by the fact that around 480,000 individuals are not registered on the e-filing website.

The tax department now plans to follow-up and issue ‘non-statutory’ letters, or letters with per se no legal backing, to the non-respondents, including those who do not have accounts on the e-filing website, said a department official who did not wish to be identified.

The tax department will also reach out to individuals among the 700,000 people who have responded, in cases where the response is found to be unsatisfactory, the official added.

The tax department plans to delay the issue of legal notices to these taxpayers in the hope that they will come forward and declare their income under the Pradhan Mantri Garib Kalyan Yojana—the income disclosure scheme announced by the Narendra Modi government that gives tax evaders an opportunity to declare their illegal income and pay a tax and penalty of 50% of the amount.

The scheme was launched after Prime Minister Narendra Modi cancelled the legal tender of old Rs500 and Rs1,000 notes on 8 November, forcing people to deposit these notes in their bank accounts.

The tax department has identified 10.9 million accounts where deposits ranging from Rs2-80 lakh were made, with average deposit size being Rs5.03 lakh, in the aftermath of demonetization. Around 148,000 accounts received deposits of more than Rs80 lakh, with the average deposit size being Rs3.31 crore.

The tax department is in the process of engaging data analytics providers, who will piece together data on addresses, mobile numbers, bank branches and business relationships, in an attempt to look for instances of tax evasion,