Demonetization: with the fall in revenues, prosecutors collect cases of demonetization for three years | India Business News
When PM Modi announced a sudden ban on 500 and 1,000 rupee bills on November 8, 2016 to eliminate undeclared cash, customers crowded a jeweler’s shop based in Mumbai, clamoring for necklaces, rings, bullion, anything of gold.
The jeweler, who asked to be identified only by his last name, Jain, to avoid retaliation, said he sold all his shares at a high price that day and that pocket income is generally obtained in two weeks.
Three months ago, he received a tax notice asking for the source of those gains and ordering him to deliver all the income earned that night, on suspicion that there was black money behind the purchase.
Jain appealed against the order, but under Indian law he had to deposit 20% of the amount in dispute.
“If we lose the case, then we have to close the business to pay the remaining amount,” Jain said.
Around 15,000 Indian jewelers have received tax claims similar to those of Jain, said Surendra Mehta, secretary of the India Bullion and Jewelers Association.
Mehta estimated that tax authorities are looking for around Rs 50,000 crore ($ 7 billion) of people in the gems and jewels sector.
“This could create a problem for the industry in the long term, since those who need to pay 20% to appeal may have to buy bullion or jewelry on credit,” Mehta said. If they lose their cases, jewelers could default on loans, potentially harming suppliers and bankers, he said.
Tax authorities have the right to demand taxes on past income, which takes time to analyze, but it is very unusual for officials to demand all income as taxes.
A Kolkata-based tax official compared the exercise with “being asked to dig a body after three years, find out how the person died and catch the killer.”
Two senior tax officials told Reuters that the department has sent thousands of notices this year, even to jewelers, demanding an estimated Rs 1.5-2 lakh crore in taxes.
The Central Board of Direct Taxes and the Ministry of Finance did not immediately respond to a request for comment, and the government has not talked about the tax demands of the jewelers.
The measure highlights Modi’s drive to shore up revenue as India’s booming economy grows to minimum levels of approximately 11 years. India’s corporate tax and revenue collection for the current year is likely to decline for the first time in at least two decades, several senior tax officials told Reuters.
Struggling to fill the chests
Officials, whose promotions and transfers depend on meeting the annual fiscal objectives of the government, are struggling to at least partially meet the deficit before the end of the fiscal year on March 31, half a dozen tax officials said.
As part of its drive to increase revenue, New Delhi has extended an amnesty plan to resolve disputes stalled in litigation until the end of March. Authorities are also investigating maids and drivers, suspecting that their wealthy employers used them to hide undeclared funds after demonetization, authorities told Reuters.
The momentum runs the risk of reigniting complaints that New Delhi is being dominant in its collection campaign, an issue that stood out when a prominent coffee tycoon who committed suicide last year left a letter blaming the persecution. of tax officials.
Three of the eight jewelers interviewed by Reuters said authorities had demanded the total amount they made on November 8, 2016, while the others refused to share details.
A tax official said the department was only imposing a tax on sales of previously undisclosed shares. He added that some jewelers were suspected of accepting the voided notes after November 8 and backing the receipts to make it appear that purchases were made when invoices were still legal tender.
Another tax officer based in Calcutta said the department would likely lose its cases against jewelers.
“I know it’s illogical … (but) at least 20% will help increase collections this year,” he said.