Post Demonetisation: ED attached Rs 9000 cr in black money, registered 3700 cases under FEMA and PMLA

New Delhi: The Enforcement Directorate (ED) has attached black money worth Rs. 9,000 crore post demonetisation. The department has also registered 3700 cases under FEMA (The Foreign Exchange Management Act) and PMLA (Prevention of Money Laundering Act) and taken action against 1000 shell companies.

On November 8, 2016, Prime Minister Narendra Modi announced to demonetise 500 and 1000-rupee banknotes. Among the main objectives of demonetisation was the flushing out of black money and also conversion of the non-formal economy into a formal economy to expand the tax base.

The FEMA is a civil law and the ED is empowered to conduct investigations into suspected contraventions of the foreign exchange laws and regulations, adjudicate, contraventions, and impose penalties on those adjudged to have contravened the law.

Under the PMLA, which is a criminal law, the ED is empowered to conduct investigations to trace assets derived out of the proceeds of crime, to provisionally attach/ confiscate the same, and to arrest and prosecute the offenders found to be involved in money laundering. According to government data, as on August 31, there was quantum jump in enforcement actions based on demonetisation data.

“There was 158 percent increase in searches from 447 to 1152 groups. Seizures increased from Rs. 712 crore to Rs. 1469 crore. There was an increase of 38 percent in admission of undisclosed income- from Rs.11,226 crore to Rs. 1,54,96 crore,” said the government.

The Income Tax Department launched ‘Operation Clean Money’ (OCM) on January 31, 2017 to analyse the data of the persons who deposited large sums of cash and whose returns of income were not in sync with such deposits. As per government data, 18 lakh suspect cases were identified through use of data analytics where cash transactions did not appear to be in line with the tax profile of depositors in the first phase of OCM. The government also says that demonetisation has widened the tax-base.

“The number of e-returns of Individual taxpayers filed till 5th August, 2017 (due date of filing) increased to 2.79 crore from 2.22 crore returns filed during the corresponding period of last year, registering an increase of about 57 lakh returns (25.3%),” says the government.

According to the government, direct tax collections also registered quantum leap.

“Collection of advance tax under personal income tax (i.e. other than Corporate Tax) as on 05.08.2017 showed a growth of about 41.79% over the corresponding period in F.Y. 2016-2017. Collection of self-assessment tax under personal income tax showed a growth of 34.25 percent over the corresponding period in F.Y. 2016-2017.”

November 8 was the first anniversary of the demonetisation.

While the Congress and other opposition parties observed November 8, 2017 as ‘black day’ across the country to oppose demonetisation, the ruling Bharatiya Janata Party (BJP) celebrated it as anti-black money day.