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A Good Beginning To End War Against Black Money : Former CBI Director

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As per data, the actual taxpayer count is even less than 5.16 crore. Only 1.3 crore individuals in 2013-2014 paid their tax. Only four per cent of the people in India (the world’s second largest country in terms of population) pay their taxes. Comparitively, in the US, 53 per cent of the people pay taxes. A black money scheme in 1975 raised Rs 241 crore and another in 1965 rustled up just Rs 29 crore. India has no official estimates of black money.


The present Government’s demonetisation drive is a good start to end the menace of black money. But more needs to be done, like confiscation of currency and have an adminisrtrative set up as an appellate authority.

Black money refers to the funds earned on the black market, on which income and other taxes have not been paid; the total amount of black money deposited in foreign banks by Indians is unknown.

One of the common way to convert black money to white is by showing income in cash. Income from tuition, professional fees or commission is shown as cash by tax payers across the country.

Another popular method used by people to convert black money to white is by showing bogus loan entry. Modus operandi under this case is: People give black money to their friend or relative and take cheque from them. This is a kind of bogus loan entry to convert black money to white. In some cases, people give re-payment of this loan by giving back a cheque.

As per data released by the Income Tax department, only 4.1 per cent of the people in the country filed income tax returns in 2015-2016. Out of 125 crore people, only 5.16 crore people actually filed their income tax returns.

As per data, the actual taxpayer count is even less than 5.16 crore. Only 1.3 crore individuals in 2013-2014 paid their tax. Only four per cent of the people in India (the world’s second largest country in terms of population) pay their taxes. Comparitively, in the US, 53 per cent of the people pay taxes. A black money scheme in 1975 raised Rs 241 crore and another in 1965 rustled up just Rs 29 crore. India has no official estimates of black money.

Last week, to break the grip of corruption and black money in the country, Prime Minster Narendra Modi decared his Government’s decision that “We have decided that the Rs 500 and Rs 1,000 currency notes presently in use will no longer be legal tender from November 8”.

He further said, “This means that Rs 500 and Rs 1,000 notes will no longer be acceptable for transactions. The notes, hoarded by anti-national and anti-social elements, will become just worthless pieces of paper. The rights and the interests of honest, hard working people will be fully protected. Let me assure you that notes of Rs 100, Rs 50, Rs 20, Rs 10  five, two and one rupee and all coins will remain legal tender and will not be affected.”

The Prime Minsiter said that this step will strengthen the hands of the common man in the fight against corruption, black money and fake currency. To minimise the difficulties of citizens in the coming days, the Prime Minister announced several steps which are as follows:

  • Persons holding old notes of Rs 500 or Rs 1,000 can deposit notes in their bank or post office accounts from November 10 till closing of banking hours on December 30, without any limit.
  • Thus, one will have 50 days to deposit the notes and there is no need to panic.
  • Your money will remain yours. You need not worry on this point.
  • After depositing your money in your account, you can draw it, whenever you need it.
  • Keeping in mind the supply of new notes, in the first few days, there will be a limit of Rs 10,000 per day and Rs 20,000 per week. This limit will be increased in the coming days.
  • Apart from depositing your notes in your bank account, another facility will also be there.
  • For your immediate needs, you can go to any bank, head post office or sub post office, show your identity proof like Aadhaar card, voter card, ration card, passport, PAN card or other approved proofs, and exchange your old Rs 500 and Rs 1,000 notes for new notes.
  • From November 10 till November 24, the limit for such exchange will be Rs 4,000. From November 25 till December 30, the limit will be increased.
  • There may be some who, for some reason, are not able to deposit their old Rs 500 or Rs 1,000 notes by December 30.
  • They can go to specified offices of the Reserve Bank of India up to March 31, 2017 and deposit the notes after submitting a declaration form.
  • Initially, ATMs will not work in some places, but one needs to be patient. In the first few days, there will be a limit of Rs 2,000 per day per card.
  • This will be raised to Rs 4,000 later.
  • Five hundred and Rs 1,000 notes will not be legal tender anymore. However, for humanitarian reasons, to reduce hardship to the citizens, some special arrangements were made till Nobvember 11, which has now been extended till November 14.
  • During this period, Government hospitals will continue to accept Rs 500 and Rs 1,000 notes for payment.
  • This is for the benefit of those families whose members may be unwell.
  • Pharmacies in Government hospitals will also accept these notes for buying medicines with doctors’ prescription.
  • Railway ticket booking counters, ticket counters of Government buses and airline ticket counters at airports were accepting the old notes for purchase of tickets till November 11, and now, it has also been extended till Novermber 14. This is for the benefit of those who may be travelling at this time.
  • For 72 hours, Rs 500 and Rs 1,000 notes will be accepted also at petrol, diesel and CNG gas stations authorised by public sector oil companies consumer co-operative stores authorised by State or Central Government milk booths authorised by State governments crematoria and burial grounds. These outlets will have to keep proper records of stock and collections.
  • Arrangements are already made at international airports for arriving and departing passengers who have Rs 500 or Rs 1,000 notes of not more than Rs 5,000, to exchange them for new notes or other legal tender.
  • Foreign tourists will be able to exchange foreign currency or old notes of not more than Rs 5,000 into legal tender.
  • One more thing, in this entire exercise, there is no restriction of any kind on non-cash payments by cheques, demand drafts, debit or credit cards and electronic fund transfer.

In spite of all these efforts, there may be temporary hardships to be faced by honest citizens. Experience tells us that ordinary citizens are always ready to make sacrifices and face difficulties for the benefit of the nation.

The present Government has made a good beginning to end the menace of black money. Still more needs to be done, like confiscation of black money and have an adminisrtrative set up, as an appellate authority. It should also include the assets acquired, including the property and business. This will send the right signal to the respestable thieves of India’s taxes. It is the Government sparing the rod has embolded the tax evaders. It is over due, to do it, sooner, than later.

By Joginder Singh

Former Director of  Central Bureau of Investigation

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