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The I-T department will rely on data analytical tools and run models to separate black money holders and genuine taxpayers based on the large data base being shared by banks.
Dilasha Seth/Business Standard reports.
Illustration: Uttam Ghosh/Rediff.com
While a staff crunch might pose a hurdle in the income tax (I-T) department's bid to nab black money holders after demonetisation, technological assistance could help it meet the challenge.
With 80% of the banned Rs 500 and Rs 1,000 currency notes returning to the banking channels, the I-T department is padding up for a mammoth task of detecting the use of illegitimate means.
Tax officials claimed the use of unconventional means would be the strategy to overcome conventional challenges such as manpower shortage.
"The ongoing strategy of chasing every bit of information, the latest income disclosure scheme and information technology database will help the department. Unconventional means are being used now," said an official.
According to the sanctioned strength of the I-T department, there are 7,294 assessment officers up to the additional commissioner level, which includes 4,204 I-T officers.
The additional commissioners and joint commissioners handle about 30 to 40 quality cases a year, while the I-T officers assess about 100 to 150 cases a year, but smaller ones.
Two income tax associations, the Income Tax Employees Federation and the Income Tax Gazetted Officers Association, in a letter to Prime Minister Narendra Modi said the lower rungs of the department are facing '30 to 35 per cent of vacancies at cutting-edge positions,' such as additional commissioner and deputy commissioner and their junior ranks.
But the department will be relying on data analytical tools and run models to sieve black money holders and genuine taxpayers based on the large data base being shared by banks for deposits.
"We will run models to identify accounts meeting a certain criterion. For instance, we may run a model for those who deposited 40% of their annual salary or more after November 8,”"said the official. "But then it is true that the follow up assessment will have to be done by joint commissioners or additional commissioners. That's where manpower shortage may hurt."
The I-T department has issued over 2,000 notices to individuals who have made deposits of over Rs 1 crore (Rs 10 million) but did not match with their declared income.
Rahul Garg, partner, PwC, said while manpower crunch may be there, availability of banking transactions and electronic database availability will help the department.
"The tax department will be able to use technology to gather information and process that. But information processing to the extent possible should be done in centralised and controlled environment so it does not result in unwanted harassment, Garg added.
I-T sleuths have cracked down on number of money laundering rackets across the country, fraudulently converting black money into white for a commission since the legal tender Rs 500 and Rs 1,000 notes was withdrawn.
The tax department has nabbed offenders and recovered cash worth several crores in crackdowns in various parts of the country including Mumbai, Ahmedabad and Nagpur.
Since November 8 the department has detected more than Rs 1,500 crore (Rs 15 billion) undisclosed income during surveys and searches and over Rs 120 crore (Rs 1.2 billion) has been seized so far.
The second income disclosure scheme, he Pradhan Mantri Garib Kalyan Yojana, is further expected to arm the department with information and recovery.
The scheme will allow those depositing money in banned Rs 500 and Rs 1,000 notes to enjoy immunity from certain taxation laws by paying a 50% tax on the undisclosed income.
Under this scheme, a quarter of the total amount will be locked in for four years and not earn any interest. The scheme will be notified after the Bill is passed by the Rajya Sabha.
