In another setback to the Modi government post the note-ban, the response to its black money amnesty scheme, Pradhan Mantri Garib Kalyan Yojana (PMGKY), has been disappointing with a measly Rs 5,000 crore being disclosed under it.
Given the applicable tax and penalty on it, the government will get only about Rs 2,500 crore as tax.
On Wednesday, the GDP data released by the Central Statistics Office (CSO) showed growth falling to 6.1 per cent in the January-March quarter of FY17, which economists said was a fall-out of demonetisation.
“The response (to the PMGKY) has not been so good...About Rs 5,000 crore of income was declared in PMGKY. There are mainly two factors for it. One, even before the scheme was announced people had tried to put their cash into different accounts. Second was the (tax and penalty) rate,” revenue secretary Hasmukh Adhia told reporters here on Thursday.
Giving a last chance to tax-evaders, the Centre had announced one last window post-demonetisation, giving them time to come clean and declare black money by paying a tax, penalty and surcharge of 49 per cent of the disclosed amount.
The scheme also required a mandatory deposit of 25 per cent of the black money in a zero-interest bearing account for four years.
The government was expecting large disclosures under PMGKY and had intensified enforcement measures during the 50-day demonetisation period ending December 31, 2016.
I-T department sources said that government had hoped for a disclosure of Rs 50,000 crore to Rs 100,000 crore. But now that the declaration is much below the target, questions are sure to be raised over the efficacy of the demonetisation exercise. The government had earlier also come out with two such schemes -- income declaration scheme (IDS-2016) for domestic cash hoarders and the other for black money hoarded abroad.
Under the IDS-2016, a total of Rs 65,250 crore had been disclosed. This resulted in a windfall gain of about Rs 30,000 crore. Prior to this, the foreign black money window had brought Rs 2,428 crore into the tax kitty.
Giving possible reasons for the low disclosures under PMGKY, Finance Minister Arun Jaitley said the scheme competed with other similar schemes. “First, you had the IDS ... over and above came the PMGKY,” Jaitley said.
“Two, three exercises are going on simultaneously. People who had deposits disproportionately larger than their income, the income tax department has asked for their details. Those who have replied, these are being processed... while those who haven't, cases are being filed against them,” he added.
The finance minister noted the positive impact of demonetisation saying it had eliminated the shadow or parallel economy.
