While the clarification conforms to Section 13A of the Income Tax Act, which exempts political parties from paying tax on income from certain sources including voluntary contributions, Business Standard reported that it did draw ire on social media. "If the deposits are made in an individual's account, that information will come under our radar", Adhia said, adding that demonetisation withdrawal limits will be reconsidered after December 30. He, however, did not explain as to what happens to those who submitted the revised income tax returns incorporating the undisclosed money that they deposited in banks post-demonetisation.
The government's move to urge people to give information about black money reminds us of Delhi Chief Minister Arvind Kejriwal's move when asked people to record videos of officials and policemen asking them for bribe and contact the anti-graft helpline started by his government. He said deposits in bank accounts of political parties are not to be taxed. Revenue Secretary Hasmukh Adhia said that black money can not be converted to white unless taxes on undisclosed assets are paid and full investigation is concluded.
Clarifying on reports that it can not scrutinise tax returns of political parties, CBDT said: "There are enough provisions in the Income Tax Act to scrutinise the accounts of the political parties and these political parties are also subject to other provisions of Income -tax including filing of return". If he files Form 60, then PAN is not required.
The ministry has offered a new tax evasion amnesty scheme for individuals and companies holding unaccounted cash. "Those who are not able to give declaration, they have to give PAN".
He said that people must understand that if people have deposited their money in banks it does not in any way mean that the unaccounted income has turned to "white" money.
Adhia added that PAN numbers of all existing account holders except for Jan Dhan/BSBD accounts would be accumulated within one or two months. In case the disclosure is not made either using the scheme or in the return, a further 10 per cent penalty on tax will be levied followed by prosecution, he said.
Prime Minister Narendra Modi scrapped 500-rupee and 1,000-rupee banknotes on November 8 in a bid to flush out cash earned through illegal activities, or earned legally but never disclosed to the taxman.