Take fight against black-money, graft to next level: PM

Take fight against black-money, graft to next level: PM Narendra Modi

Asking the people to take the fight against black-money and graft to the “next level”, Prime Minister Narendra Modi today urged them to use less cash in their daily lives and continue to support the movement towards digital payments started after the note ban.

black-money, statIn his monthly ‘Mann ki Baat’ programme, he also spoke of building a ‘New India’, which he said can be achieved when 125 crore Indians take a pledge and unitedly work towards it.

“My dear countrymen, we must take our fight against black money and corruption to the next level. …. We should contribute towards ensuring reducing the use of cash, of currency notes,” the Prime Minister said.

Asking the people to pay school fees, buy medicines or items from fair price shops or purchase air and train tickets digitally, he said “we can do this in our day to day lives. You can’t imagine how you can serve the country in this way and become a brave soldier in the fight against black money and corruption.”

Observing that the budget had announced that there would be 2500 crore digital transactions this year, he said if 125 crore countrymen can resolve, “they need not wait for a year; they can do it in six months.”

Expressing gratitude to the people, Modi said over the last few months the country has witnessed an atmosphere in which people in large numbers have participated in the digital payment, ‘Digidhan’ movement.

“There has also been an increase in curiosity about cashless transactions. The poorest of the poor are making attempts to learn, and people are gradually moving towards doing business without cash. There has been a surge in various modes of digital payment after demonetisation,” he said, adding that the BHIM App, launched about two and a half months ago, has already been downloaded by one and half crore people.

In his address, the Prime Minister also touched upon subjects ranging from building a “New India” to ‘Swaccha Bharat’, besides greeting the people of Bangladesh on their independence day saying India will always stand with them in the struggle for peace, security and development in the region.

“I hope that Bangladesh marches ahead on the path of progress. I also assure the citizens of Bangladesh that India is a strong partner, and a good friend, and we will continue to work together shoulder to shoulder to contribute towards the peace, security and development of this entire region,” the Prime Minister said.

He said it was a matter of pride that Rabindra Nath Tagore, who has authored the national anthem of Bangladesh and India, had given up his Knighthood in protest against the 1919 massacre of people in Jallianwala Bagh by the British.

This had also provided an “inspiration and a mission in life” to a young teenager, who until then had spent his days playing merrily in the fields. This youngster was none other than Bhagat Singh, then 12-years old, to evolve as a martyr.

Modi also referred to the Champaran Satyagraha launched by Mahatma Gandhi in 1917, saying “through his demeanour and deeds, he could inspire the poorest of the poor, the most illiterate, to unite and come together out into the open for the struggle against the British Rule.

“This was a manifestation of an incredible inner strength, through which we can experience the vastness of Mahatma Gandhi’s great persona,” the Prime Minister said.

He said the government of India has taken “a very important decision” to give working women maternity leave of 26 weeks, instead of the earlier 12 weeks, for their pregnancy and delivery.

“There are now only two or three countries in the world that are ahead of us in this matter. India has taken a very important decision for these working women sisters of ours. The basic aim is to ensure proper care of the newborn, the future citizen of India, from the time of birth. The newborn should get the complete love and attention of the mother.”

Talking about “New India”, he said it is “not a government scheme or political party’s programme. “In essence, every citizen must discharge his civic duties and esponsibilities. This in itself would be a good beginning to the New India.”

The Prime Minister said if 125 crore Indians take a pledge and work unitedly towards making a “New India”, then it is possible to realise this dream of countrymen.

He also talked about his favourite “Swachch Bharat” drive and said people of the country are getting angry as far as dirt is concerned and this will lead to more efforts towards cleanliness. Modi also talked about wastage of food saying it is unfortunate and an injustice to the poor.

He also spoke at length about depression and how it can be overcome by expressing one’s feeling to the near and dear ones and urged the people to help those suffering from it to overcome it.

Talking about the importance of Yoga, he called upon Indians to make the 3rd International Day of Yoga memorable by involving more and more people.

-26 March 2017 | PTI | New Delhi

Union Budget 2017; most brilliant document since 1991 Budget: Surjit Bhalla

Union Budget 2017 is probably most brilliant document since the 1991 Budget

By: Surjit Bhalla

The Union Budget has been extra-careful and conservative about the impact of DeMo on the economy. It is very likely that GDP growth for FY17 will close in on a number above 7%. It is probably the most brilliant economic and political document since the path-breaking 1991 Budget.

A detached, unhurried reading of Union Budget 2017 does lead one to conclude that it was not a run of the mill Budget. It was different, both in what it did, and what it did not do. It was a state-of-the-art workmanlike Budget with one flaw—it hesitated to go the full, logical distance in tax reforms. Why? Likely because it is waiting for a near-optimal political and economic moment February next year.

Union BudgetIn several articles preceding this Budget, and ever since the demonetisation (DeMo) policy announced on November 8, I have argued that the key post-DeMo goal of the government should be to create a political and economic environment conducive to considerably less creation of black money. I had identified three key areas for policy. First, individual income tax compliance must be made to increase, and as jointly argued with Arvind Virmani, this would not happen unless incentives (carrots) were given to taxpayers for them to come into the tax net and for them to declare a larger fraction of their income. Second, the real estate sector needed to be cleaned up, for it was a major sink for black money. Third, election-funding policies needed to be urgently reformed—this politician-dominated sector is one of the largest black sinks.

On the latter two policy objectives, the Budget has been extraordinarily innovative—especially on election funding.

In addition to black money, the other problem plaguing the Indian economy has been the low rate of growth of capital formation (investment) by the private sector. This, I had emphasised, was very likely due to the extraordinarily high rates of taxation of profits in India. The corporate sector, in aggregate, was paying more than 60% of its profits as taxes to the government (corporate tax, dividend tax, pension payments, insurance payments, indirect taxes, surcharges, cesses—need one go on?). FM Jaitley has decided to fire the first salvo in cutting tax rates of a bygone socialist era in which profits were considered “evil” and something bhadralok shunned with pride.

For 96% of firms (all those with turnover less than R50 crore), the corporate tax rate has been reduced by 5 percentage points—from 30% to 25%. This is just not enough, and possibly a major clean-up will be presented in next year’s Budget when (hopefully) a no-exemption corporate tax rate of 18-20% will be implemented for all firms, big and small.

Personal income tax (PIT) rates: Modi-Jaitley have taken a significant step forward by halving the tax rate (from 10% to 5%) for the lower middle-class of taxpayers (earning between R2.5 lakh and R5 lakh). Even taxpayers earning between R5 lakh and R50 lakh will have their tax outgo reduced by R12,500. For those earning between R50 lakh and R1 crore there is a tax surcharge of 10%, and the surcharge for incomes above R1 crore is retained at 15%.

There are important state elections (especially UP) days after the Budget presentation on February 1. It is well recognised (and perhaps, inevitably, should be) that a Budget is both an economic and a political document. Jaitley goes to considerable length in the Budget to emphasise that we are not a PIT compliant society. To coin a phrase, when it comes to PIT, Indians are pits. This was also emphasised by PM Modi on December 31, and this is a very welcome innovation for leading policymakers to publicly, and loudly, admit to the plague of tax non-compliance.

Comparing the tax compliance data offered by Jaitley on page 28 of the Budget speech and our synthetic or estimated income distribution for 2011 to 2016/17 (the one used by Virmani and myself), one gets the following result: For 2015-16, those earning between R10 lakh and R50 lakh (individuals with no tax surcharge), only 13% of individuals paid taxes, while for those with incomes above R50 lakh, tax compliance is 26%, i.e., the super-rich who are paying a 10-15% surcharge are twice as tax compliant as the near-rich! So, the policy of not cutting taxes for all is an opportunity missed; next year, maybe?

However, in the main, the Budget is workmanlike, and brilliant, in being focused on the Big Picture, and ignoring all advice to do the wrong things—e.g., instituting long-term capital gains tax, or bringing in inheritance tax, or providing doles instead of infrastructure, rejecting universal basic income, and indirectly hinting (through the Economic Survey) that the days of cash transfers for the poor were near (bye-bye, PDS). The best commentary on NREGA was by the FM when he declared that this favourite of Sonia Gandhi and the Congress-Left had received the maximum ever allocation of R48,000 crore. What Jaitley did not emphasise was that this was the lowest in real terms since the programme was initiated in 2008-09; the real allocation to NREGA is now less than two-thirds of the R37,400 made available in 2008-09. Further, and more importantly, NREGA has been converted into a programme for providing infrastructure for irrigation.

The Budget has been extra-careful and conservative about the impact of DeMo on the economy. It is very likely that GDP growth for FY17 will close in on a number above 7%. Somewhat surprisingly, DeMo has not had that big a negative impact on the economy. The jury is still out, but all (conservative) official estimates peg GDP growth at no less than 6.7%. This is obtained with a GDP for agriculture at 4.1%. Kharif acreage, unaffected by DeMo, had an expansion of 3.5%. Add a minuscule productivity growth of 0.6%, and one obtains the CSO estimate of 4.1% agricultural growth for FY17.

The CSO was honest about not extrapolating beyond October 2016. But the rabi acreage, advertised by many anti-DeMo experts as doomed, has expanded by at least 5.9% (all data as of January 13, 2016, Economic Survey, pg. 156); wheat acreage is up by 7.1%. This implies that a minimum level of agricultural growth for FY17 will likely be close to 5.5%, and the likely level being 6-7%. Assuming agricultural growth of 6.5% (versus the 4.1% CSO estimate) yields a GDP growth level of 7.1%, well above that of the (deliberately conservative) ministry of finance and near identical to the estimates of both CSO and RBI.

The BJP, especially PM Modi, is a long-distance runner, a Test player, rather than gimmicky T20s (or even less gimmicky ODI). This longer vision has been apparent for some time, and I believe comes out strongly in the Budget in its estimate of the fiscal deficit for FY18. Remember, the Budget is (ultimately) about fiscal-ism, revenues and expenditures, i.e., the fiscal deficit.

The Budget has not only under-estimated GDP growth, but also the addition to tax revenue this year, and in the future, from increased PIT tax compliance. The fiscal deficit for next year is very likely to be less than 3.2% target for FY18, and likely less than 3%. If both tax revenues and GDP growth are understated, the fiscal deficit is doubly overstated! What a great idea, Sirji.

Large state elections are only in November 2018; and 2019 are the national elections. Flush with higher than expected tax revenue and GDP growth, the Modi government will likely complete tax reform for individuals, and corporates, in February next year. What exquisite timing—set a conservative base this year, so you can be radical next year.

The author is contributing editor, The Financial Express, and senior India analyst at Observatory Group, a New York-based macro policy advisory group
Views are personal
Twitter: @surjitbhalla


Demonetisation is a Big Bang reform: Surjit Bhalla

Demonetisation is a Big Bang reform

By: Surjit Bhalla

One of the more endearing, and enlightening, acronym that the Indian upper class has come up with is PLUs—People Like Us. Both the Indian, and Western PLUs have been clamouring for Big Bang reforms for the last two and a half years. The demand had a lot of merit—for the first time in 25 years, there was a government with a clear majority in the Lok Sabha. While several economic reforms were initiated since May 2014, and by my calculation more than the cumulative set of reforms since (but not including 1991), the PLUs were not satisfied and bayed for more—yeh “liberal” maange more. Finally, when PM Modi delivered the Big Bang, the PLUs were so deafened that they refused to see the writing on the reform wall.

DemonetisationBut why did the intelligentsia and mainstream media (domestic and especially foreign) did not see that demonetisation was (obviously) part of a BIG Bang reform? For one simple reason—the battle is ideological, and has precious little to do with the content of reform. And PLUs ideology dictates that whatever any non-Congress government does, has to be wrong, immoral, and illiberal. Soon after the May 2014 election, I suggested that the big story of the election was the forthcoming battle between the old elite, and the new, yet to be formed, elite. A battle between the established middle class, and the new middle class. A battle between the amoral naam-ke-waste liberal policies of the last 70 years, and a vision, and accompanying policies, for a transformed India.

Demonetisation 2016 only confirms that the battle of the elites is the one forecast I did get right. The old elite keeps stating three arguments in support of their defense that demonetisation has been a failure. The first, Rottweiler like, that demonetisation has failed because most of the old banned notes have been deposited in banks. The purpose of demonetisation, according to PLUs and their voting outlet, the Congress, was that a large chunk (possibly R2-4 lakh crore) of banned notes would not return to the system. The fact that money not returned is likely to be lower than the lowest estimate means that D-policy has failed. But who said that this was even a minor goal of demonetisation? The old elite, of course.

The second focus of the ideological view that D-policy has been a failure is the botched-up implementation. To repeat this as the reason to reject D-policy is myopia of the worst kind. Of course, implementation has been bad; even the government (and RBI) admits to it, as revealed by the much noted fact that the government has changed policy on a daily basis. Having noted this dog bites man fact, let us proceed. If the government had all the time in the world, of course the implementation would have been as perfect as the Kumbh Mela or the annual Republic Day parade. Secrecy was required, and there is a near certain likelihood that D-day was preponed because the secret was getting out. So, can one really call it a botch-up? If you are the old elite, then what other weapon have you got to disagree, complain, and question?

But there is a third option. Document and rightfully complain about the fact that people, especially poor people, have been inconvenienced—they have to stand in queues with no return (all puns intended). This is not surprising, even though it is revolting. The Left-liberal apologists for the rich have always shot-off the backs of the bottom half. This half has been hurt by D-policy in terms of jobs lost, and income not received. What is remarkable is that not only have they not complained about this genuine loss, but they have verbally, actively, and in the poll booth supported the Big Bang initiative.

The bottom 90% realises that those hurt by D-policy are the old elite, amongst whom are a large proportion of those gaming the system by laundering their black money via the other 90 %. A truly shocking fact just revealed by the government is that 6 million units (individuals, small firms and NGOs) have deposited a total of R7 lakh crore of the banned notes. That is an average of R11 lakh (or $15,000) per unit.

I would like to hear from the PLUs—how many elites do they know in the Western world who keep an average of $15,000 of cash at home? These very same elites had opposed demonetisation on the grounds that there was very little black cash in the economy because the bad rich were too smart to have any black cash. The fact that there was a lot of extra cash in the economy has two immediate implications. The government must continue with its policy of limiting cash withdrawals after December 30—no more than R1 lakh per individual and no more than R5 lakh per firm. Second, that no more than say R11 lakh crore of new cash (a comfortable excess of what is really required) of the banned R15.4 lakh crore should be printed. These are important steps to foil any attempts to keep the old order, and to encourage the ringing of the new.

India 2016 is very likely to go down in history as comparable to China 1978. Fifty days later after D-day is too soon to pass judgement. One hundred and fifty days later the transformative power of D will (hopefully) become obvious.

Courtesy: financialexpress.com,  December 31, 2016


Demonetisation: Income Tax department seizes Rs 3,185 crore black money, Rs 86 crore in new notes

Demonetisation: Income Tax department seizes Rs 3,185 crore black money, Rs 86 crore in new notes

Waging war against black money hoarders, the Income Tax department has uncovered more than Rs 3,185 crore of black money and seized Rs 86 crore worth new notes in its country-wide drive since the demonetisation of high denomination Rs 500 and Rs 1,000 notes on November 8.

Demonetisation: Income Tax department seizes Rs 3,185 crore black money, Rs 86 crore in new notes

Waging war against black money hoarders, the Income Tax department has uncovered more than Rs 3,185 crore of black money and seized Rs 86 crore worth new notes in its country-wide drive since the demonetisation of high denomination Rs 500 and Rs 1,000 notes on November 8.

News agency PTI attributing to official sources said the taxman carried out a total of 677 search, survey and enquiry operations under the provisions of the Income Tax Act since the note ban was declared on November 8, even as the department has issued over 3,100 notices to various entities on charges of tax evasion and hawala-like dealings.

The report added that the IT department  has seized cash and jewellery worth over Rs 428 crore during the same period even as the new currency seized (majorly Rs 2000 notes) is valued at about Rs 86 crore.

“The total undisclosed income admitted or detected as part of this action, till December 19, is more than Rs 3,185 crore,” they said.

The agency has also referred over 220 cases to its sister agencies like the CBI and the Enforcement Directorate (ED) to probe other financial crimes like money laundering, disproportionate assets and corruption as part of their legal mandate.

The tax officials including Central Board of Direct Taxes (CBDT), banks and regulator RBI are closely coordinating to check tax evasion and illegal profiteering leading to black money.

The tax officials have also been directed to deposit the new currency detected to banks so that it can be utilised to disburse to common public.

-December 20, 2016, New Delhi





Historic announcements on ending corruption and black money by PM

Historic announcements on ending corruption and black money by PM

Rs 500 and Rs 1000 rupee notes will no longer be legal tender from midnight tonight

In a Historic move that will add record strength in the fight against corruption, black money, money laundering, terrorism and financing of terrorists as well as counterfeit notes, the Government of India has decided that the five hundred and one thousand rupee notes will no longer be legal tender from midnight, 8th November 2016.
The Government has accepted the recommendations of the RBI to issue Two thousand rupee notes and new notes of Five hundred rupees will also be placed in circulation.Notes of one hundred, fifty, twenty, ten, five, two and one rupee will remain legal tender and will remain unaffected by the decision today.Prime Minister Shri Narendra Modi made these important announcements during a televised address to the nation on the evening of Tuesday 8th November 2016. He said that these decisions will fully protect the interests of honest and hard-working citizens of India and that those five hundred and one thousand rupee notes hoarded by anti-national and anti-social elements will become worthless pieces of paper.

The Prime Minister said the steps taken by the Government would strengthen the hands of the common citizens in the fight against corruption, black money and counterfeit notes.

Fully sensitive to some of the difficulties the common citizens may face in the coming days, the Prime Minister has announced a series of steps that will help overcome the potential problems.

Persons holding old notes of five hundred or one thousand rupees can deposit these notes in bank or post offices from 10th November onwards till 30th December, the Prime Minister announced. There are also some limits placed on the withdrawals from ATMs and bank for the very short run.

Shri Modi stated that on humanitarian grounds notes of five hundred and one thousand rupees will be accepted at government hospitals, pharmacies in government hospitals (with prescription of a doctor), booking counters for railway tickets, government buses, airline ticket counters, petrol, diesel and gas stations of PSU oil companies, consumer cooperative stores authorized by the state or central government, milk booths authorized by state government and crematoria, burial grounds.

Shri Modi emphasized that there is no restriction on any kind of non-cash payments by cheques, demand drafts, debit or credit cards and electronic fund transfer.

In his address the Prime Minister shared the insight into how the magnitude of cash in circulation is linked to inflation and how the inflation situation is worsened due to the cash deployed through corrupt means. The Prime Minister added that it adversely affects the poor and the neo-middle class people. He cited the example of the problems being faced by the honest citizens while buying houses.

A time-tested commitment to eradicate black money

The Prime Minister has time and again said that the Government is committed to ensure that the menace of black money is overcome. Over the past two and a half years of the NDA Government, he has walked the talk and led by example.

The very first decision of the Prime Minister led NDA government was the formation of a SIT on black money.

A law was passed in 2015 on disclosure of foreign bank accounts. In August 2016 strict rules were put in place to curtail benami transactions. During the same period a scheme to declare black money was introduced.

The efforts have borne fruit. Over the past two and a half years, more than Rs. 1.25 lakh crore of black money has been brought into the open.

Raising the issue of black money at the world stage

Prime Minister Narendra Modi has time and again raised the issue of black money at the global forum, including at important multilateral summits and in bilateral meetings with leaders.

Record growth in last two and a half years

The Prime Minister said that the efforts of the Government have led to India emerging as a bright spot in the global economy. India is a preferred destination for investment and India is also an easier place to do business in. Leading financial agencies have shared their optimism about India’s growth as well.

Combined with this, Indian enterprise and innovation has received a fillip due to the ‘Make in India’, ‘Start up India’ and ‘Stand up India’ initiatives that seek to celebrate enterprise, innovation and research in India.

The historic announcements made by the Prime Minister will add value to the already thriving efforts of the Central Government.

Text of Prime Minister’s address to the Nation

My dear citizens

I hope you ended the festive season of Diwali with joy and new hope. Today, I will be speaking to you about some critical issues and important decisions. Today I want to make a special request to all of you. You may recall the economic situation in May 2014 when you entrusted us with an onerous responsibility. In the context of BRICS, it was being said that the “I” in BRICS was shaky. Since then, we had two years of severe drought. Yet, in the last two and a half years with the support of 125 crore Indians, India has become the “bright spot” in the global economy. It is not just we who are saying this; it is being stated by the International Monetary Fund and the World Bank.

In this effort for development, our motto has been ‘Sab Ka Saath Sab Ka Vikas’: We are with all citizens and for development of all citizens. This Government is dedicated to the poor. It will remain dedicated to them. In our fight against poverty, our main thrust has been to empower the poor, and make them active participants in the benefits of economic progress.

The Pradhan Mantri Jan Dhan Yojana,

the Jan Suraksha Yojana,

the Pradhan Mantri Mudra Yojana for small enterprises,

the Stand-up India programme for Dalits, Adivasis and Women,

the Pradhan Mantri Ujjwala Scheme for gas connections in the homes of the poor,

the Pradhan Mantri Fasal Beema Yojana and Pradhan Mantri Krishi Sinchai Yojana to protect the income of farmers,

the Soil Health Card Scheme to ensure the best possible yield from farmers’ fields,

and the e-NAM National Market Place scheme to ensure farmers get the right price for their produce

—these are all reflections of this approach.

In the past decades, the spectre of corruption and black money has grown. It has weakened the effort to remove poverty. On the one hand, we are now No. 1 in the rate of economic growth. But on the other hand, we were ranked close to one hundred in the global corruption perceptions ranking two years back. In spite of many steps taken, we have only been able to reach a ranking of seventy-six now. Of course, there is improvement. This shows the extent to which corruption and black money have spread their tentacles.

The evil of corruption has been spread by certain sections of society for their selfish interest. They have ignored the poor and cornered benefits. Some people have misused their office for personal gain. On the other hand, honest people have fought against this evil. Crores of common men and women have lived lives of integrity. We hear about poor auto-rickshaw drivers returning gold ornaments left in the vehicles to their rightful owners. We hear about taxi drivers who take pains to locate the owners of cell phones left behind. We hear of vegetable vendors who return excess money given by customers.

There comes a time in the history of a country’s development when a need is felt for a strong and decisive step. For years, this country has felt that corruption, black money and terrorism are festering sores, holding us back in the race towards development.

Terrorism is a frightening threat. So many have lost their lives because of it. But have you ever thought about how these terrorists get their money? Enemies from across the border run their operations using fake currency notes. This has been going on for years. Many times, those using fake five hundred and thousand rupee notes have been caught and many such notes have been seized.

Brothers and sisters,

On the one hand is the problem of terrorism; on the other is the challenge posed by corruption and black money. We began our battle against corruption by setting up an SIT headed by a retired Supreme Court judge, immediately upon taking office. Since then

• a law was passed in 2015 for disclosure of foreign black money;

• agreements with many countries, including the USA, have been made to add provisions for sharing banking information;

• a strict law has come into force from August 2016 to curb benami transactions, which are used to deploy black money earned through corruption;

• a scheme was introduced for declaring black money after paying a stiff penalty;

My dear countrymen,

Through all these efforts, in the last two and a half years, we have brought into the open nearly 1 lakh 25 thousand crore rupees of black money belonging to the corrupt. Honest citizens want this fight against corruption, black money, benami property, terrorism and counterfeiting to continue. Which honest citizen would not be pained by reports of crores worth of currency notes stashed under the beds of government officers? Or by reports of cash found in gunny bags?

The magnitude of cash in circulation is directly linked to the level of corruption. Inflation becomes worse through the deployment of cash earned in corrupt ways. The poor have to bear the brunt of this. It has a direct effect on the purchasing power of the poor and the middle class. You may yourself have experienced when buying land or a house, that apart from the amount paid by cheque, a large amount is demanded in cash. This creates problems for an honest person in buying property. The misuse of cash has led to artificial increase in the cost of goods and services like houses, land, higher education, health care and so on.

High circulation of cash also strengthens the hawala trade which is directly connected to black money and illegal trade in weapons. Debate on the role of black money in elections has been going on for years.

Brothers and sisters,

To break the grip of corruption and black money, we have decided that the five hundred rupee and thousand rupee currency notes presently in use will no longer be legal tender from midnight tonight, that is 8th November 2016. This means that these notes will not be acceptable for transactions from midnight onwards. The five hundred and thousand rupee 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 one hundred, fifty, twenty, ten, five, two and one rupee and all coins will remain legal tender and will not be affected.

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, several steps are being taken.

1. Persons holding old notes of five hundred or one thousand rupees can deposit these notes in their bank or post office accounts from 10th November till close of banking hours on 30th December 2016 without any limit.

2. Thus you will have 50 days to deposit your notes and there is no need for panic.

3. Your money will remain yours. You need have no worry on this point.

4. After depositing your money in your account, you can draw it when you need it.

5. Keeping in mind the supply of new notes, in the first few days, there will be a limit of ten thousand rupees per day and twenty thousand rupees per week. This limit will be increased in the coming days.

6. Apart from depositing your notes in your bank account, another facility will also be there.

7. 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 five hundred or thousand rupee notes for new notes.

8. From 10th November till 24th November the limit for such exchange will be four thousand rupees. From 25th November till 30th December, the limit will be increased.

9. There may be some who, for some reason, are not able to deposit their old five hundred or thousand rupee notes by 30th December 2016.

10. They can go to specified offices of the Reserve Bank of India up to 31st March 2017 and deposit the notes after submitting a declaration form.

11. On 9th November and in some places on 10th November also, ATMs will not work. In the first few days, there will be a limit of two thousand rupees per day per card.

12. This will be raised to four thousand rupees later.

13. Five hundred and thousand rupee notes will not be legal tender from midnight. However for humanitarian reasons, to reduce hardship to citizens, some special arrangements have been made for the first 72 hours, that is till midnight on 11th November.

14. During this period, government hospitals will continue to accept five hundred and thousand rupee notes for payment.

15. This is for the benefit of those families whose members may be unwell.

16. Pharmacies in government hospitals will also accept these notes for buying medicines with doctors’ prescription.

17. For 72 hours, till midnight on 11th November, railway ticket booking counters, ticket counters of government buses and airline ticket counters at airports will accept the old notes for purchase of tickets. This is for the benefit of those who may be travelling at this time.

18. For 72 hours, five hundred and thousand rupee 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.

19. Arrangements will be made at international airports for arriving and departing passengers who have five hundred or thousand rupee notes of not more than five thousand rupees, to exchange them for new notes or other legal tender.

20. Foreign tourists will be able to exchange foreign currency or old notes of not more than Rs 5000 into legal tender.

21. One more thing I would like to mention, I want to stress that 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.

Brothers and sisters,

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. I see that spirit when a poor widow gives up her LPG subsidy, when a retired school teacher contributes his pension to the Swacch Bharat mission, when a poor Adivasi mother sells her goats to build a toilet, when a soldier contributes 57 thousand rupees to make his village clean. I have seen that the ordinary citizen has the determination to do anything, if it will lead to the country’s progress.

So, in this fight against corruption, black money, fake notes and terrorism, in this movement for purifying our country, will our people not put up with difficulties for some days? I have full confidence that every citizen will stand up and participate in this ‘mahayagna’. My dear countrymen, after the festivity of Diwali, now join the nation and extend your hand in this Imandaari ka Utsav, this Pramanikta ka Parv, this celebration of integrity, this festival of credibility.

I am sure that all political parties, all governments, social services organizations, the media and indeed all sections of the society will take part in this with enthusiasm and make it a success.

My dear countrymen,

Secrecy was essential for this action. It is only now, as I speak to you, that various agencies like banks, post offices, railways, hospitals and others are being informed. The Reserve Bank, banks and post offices have to make many arrangements at very short notice. Obviously, time will be needed. Therefore all banks will be closed to the public on 9th November. This may cause some hardship to you. I have full faith that banks and post offices will successfully carry out this great task of national importance. However, I appeal to all of you to help the banks and post offices to meet this challenge with poise and determination.

My dear citizens,

From time to time, based on currency needs, the Reserve Bank with the approval of the Central Government brings out new notes of higher value. In 2014, the Reserve Bank sent a recommendation for issue of five thousand and ten thousand rupee notes. After careful consideration, this was not accepted. Now as part of this exercise, RBI’s recommendation to issue two thousand rupee notes has been accepted. New notes of five hundred rupees and two thousand rupees, with completely new design will be introduced. Based on past experience, the Reserve Bank will hereafter make arrangements to limit the share of high denomination notes in the total currency in circulation.

In a country’s history, there come moments when every person feels he too should be part of that moment, that he too should make his contribution to the country’s progress. Such moments come but rarely. Now, we again have an opportunity where every citizen can join this mahayajna against the ills of corruption, black money and fake notes. The more help you give in this campaign, the more successful it will be.

It has been a matter of concern for all of us that corruption and black money tend to be accepted as part of life. This type of thinking has afflicted our politics, our administration and our society like an infestation of termites. None of our public institutions is free from these termites.

Time and again, I have seen that when the average citizen has to choose between accepting dishonesty and bearing inconvenience, they always choose to put up with inconvenience. They will not support dishonesty.

Once again, let me invite you to make your contribution to this grand sacrifice for cleansing our country, just as you cleaned up your surroundings during Diwali.

Let us ignore the temporary hardship

Let us join this festival of integrity and credibility

Let us enable coming generations to live their lives with dignity

Let us fight corruption and black money

Let us ensure that the nation’s wealth benefits the poor

Let us enable law-abiding citizens to get their due share.

I am confident in the 125 crore people of India and I am sure country will get success.

Thank you very much. Thanks a lot.


Bharat Mata Ki Jai.

-Prime Minister’s Office, 08-November, 2016

Under Income Declaration Scheme Rs 65,250 crore black money mopped up

Under Income Declaration Scheme 2016 Rs 65,250 crore black money mopped up

Rs 65,250 crore black money mopped up under Income Declaration Scheme 2016: Finance Minister

What should be termed as a boost to government’s efforts in cracking down on black money, the Income Tax Declaration Scheme that ended on September 30 managed to mop up Rs 65,250 cr.

Finance Minister Arun Jaitely, on Saturday disclosed the cumulative amount collected by the income tax department. He also disclosed that 64,275 disclosures were made under the IDS scheme. Jaitley added that the money will go into the Consolidated fund of India and would be used for public welfare in social schemes.

Jaitley added that black money declaration figure could be revised upwards, once final assessment was complete.

The Income Declaration Scheme, 2016 came into effect from 1st  June, 2016.  It provided an opportunity to persons who had not paid full taxes in the past to come forward and declare their domestic undisclosed income and assets.Declarations could be made online as well in printed copies of the prescribed form up to midnight on 30th September, 2016.

If a person declared Rs 100 lakh as undisclosed income under the scheme, then he would have to pay a total of Rs.45 lakh as tax, surcharge and penalty.

The scheme said that ,“In case this is paid from other undisclosed income, then “the declarant will not get any immunity under the Scheme.”

Arun Jaitley also said that there will be no vindictive or fvourable action take against anyone.

“The department does not intend to be vindictive. Declarants will be treated under relevant tax laws, irrespective of filing under the Income Disclosure Scheme. Regarding the action henceforth, this is an issue of tax department. Individual taxmen will not take vindictive action,” said Jaitley.

The major steps taken by the Government against Black Money in the last more than two years include:

SIT: Many recommendations accepted such as mandatory quoting of PAN for cash transactions etc.

Legal Framework: Making tax crimes predicate offence under PMLA; Amendment of FEMA to provide for confiscation of domestic assets in place of foreign assets; Enactment of Black Money Law and Amendment to Benami Act.

International Treaties: Signing of FATCA with US; Amendment of Mauritius Treaty; Initiative for signing of Automatic Exchange of Information Treaty with all major countries including Switzerland, Initiatives under BEPS (Based Erosion and Profit Sharing) such as country by country reporting,  PoEM ( Place of Effective Management) etc.

Detection and administration of tax evasion cases: Assessment of Rs.8000 crore in HSBC cases as well as filing of 164 prosecution complaints in l75 HSBC cases; detection of Rs.5, 000 crores of undisclosed deposits in foreign accounts made out of ICIJ cases, 55 prosecution cases filed in those cases; Big investigation in Panama cases has led to 250 references being made to other countries asking for details about tax evaders, bank accounts etc.

The quantum jump in the searches and survey has resulted in seizure of Rs.1986 crores as well as undisclosed income of Rs.56, 378 crore in the last two and half years. The upgradation of IT capabilities has led to non-intrusive methods of detection of tax evasion.  Rs.16, 000 crores received as tax out of one such system of Non-filers of Monitoring System (NMS). 3626 cases of prosecution and compounding in the last two and half years which is more than double as compared to previous two years.

-October 1, 2016, New Delhi


How Bollywood turns black money into white

How Bollywood turns black money into white

I-T Department report blows lid off dodgy dealings.

It is no secret that the Income Tax Department keeps a watch on Bollywood producers, distributors, and actors, but a recent report has detailed how exactly people behind the glitzy world of the silver screen avoid taxes with dodgy dealings through hawala and hot-money routes.

The first-of-its-kind I-T analysis establishes major evasion practices such as suppression of receipts from movies, using ancillary sources, inflation of expenses and a huge amount of out-of-books payments/receipts, all a “well-established practice rampant in Bombay film industry.”

Past cases

The income tax analysis is based on past cases, existing audit books and several assessment orders passed under section 14A.

It documents how violation of Section 44AA (mandatory maintaining of books of accounts), section 44AB (mandatory audits of books), and section 285-B (statements of payments made over Rs 50,000 by the producers) has become rampant.

The IT Act, 1961 provides for different sections and rules to impose tax on revenue sources of the industry. Sections 44AA, 44AB, and 285-B, Rules 9A and 9B for producers and distributors respectively, and the TDS provisions of Sections 192, 194 C and 194 J are also to be used when making payments to/for actors, directors, editors, special effects experts, logistics contractors, and recording and dubbing studios, among others.

The report finds significant funding from hawala and hot-money routes, portending a grave threat to tax mobilisation, and even to general law and order.

“The movie industry is operating in a volatile environment that is threatening its traditional sources of revenue,” the report says. “It is highly exposed to the black economy and poses myriad challenges to the tax administration.”

In 2011, a leaked cable released by Wikileaks had spoken of the film industry’s underworld connections, and that “it welcomed funds from gangsters and politicians looking for ways to launder their ill-gotten gains, known in India as ‘black money’”. In 2012, a sting operation by news website Cobrapost had caught leading producers and directors allegedly admitting on camera how the industry is being used to convert “black” money into “white”.

Further verification and investigation by The Hindu into these dodgy tax practices stood validated from the personal account of scores of technicians, line producers, distributors, confirming the practices as commonplace on film sets.

Leaked WikiLeaks cable revealed Bollywood’s underworld links

A recent report of the Income Tax department on Mumbai’s film industry finds significant funding from hawala and hot-money routes, portending a grave threat to tax mobilisation, and even to general law and order.

“The movie industry is operating in a volatile environment that is threatening its traditional sources of revenue,” the report says. “It is highly exposed to the black economy and poses myriad challenges to the tax administration.”

In 2011, a leaked cable released by WikiLeaks had spoken of the film industry’s underworld connections, and that “it welcomed funds from gangsters and politicians looking for ways to launder their ill-gotten gains, known in India as ‘black money.’”

In 2012, a sting operation by news website Cobrapost had caught leading producers and directors allegedly admitting on camera how the industry is being used to convert “black” money into “white”.

Further verification and investigation by The Hindu into these dodgy tax practices stood validated from the personal account of technicians, line producers, distributors, confirming the practices as commonplace.

According to the report’s findings, a film is produced and supplied through a complex channel of studios, distributors, exhibitors and artists, organised around star value and fame. The process of accumulating ill-gotten funds starts with production. The producer lines up ad hoc unaccounted funds in the guise of loans under bogus names. All the bogus credits and hawala entries are offset by ‘bogus debits and factious expenses [report].’

“The core issue is really of financing: unless a ‘star’ signs the film, banks stay away from funding. Funding in an ad hoc manner, from property dealers and other business sources, leaves clear room for grey transactions carried out of books,” says Jagdish, a sought-after production assistant.

Jagdish has worked in 50 TV soaps and over a dozen films including Zid, a film that was produced by director Anubhav Sinha, who was caught in the Cobrapost sting allegedly agreeing to launder money.

“The black-to-white ratio in medium-budget films not financed by banks but by multiple, small financier ranges is 60:40, even much higher in some cases,” says Jagdish.

In this context, the legend surrounding the Kumar Sanu produced film Utthaan is unique. The entire movie was allegedly made using only cash. “At the end of each day,” a production assistant says, “a vehicle filled with bags of cash would be delivered to not only workers and technicians, but also senior artists.”

A senior filmmaker says: “In my previous film [a sex thriller], we paid our DOP (director of photography) nearly Rs. 25 lakh in cash to avoid dual taxation issues as he lived in the United States.”

Some major production houses have registered their companies overseas, thereby arousing suspicion among taxmen. The Hindu is not naming a few production houses documented in the report for their overseas funding as the report does not provide solid data, and this publication was unable to independently verify these allegations. The movie industry is highly exposed to black economy and poses myriad challenges to the tax administration.

SHARAD VYASMUMBAI, December 8, 2015

Black money: Govt collects Rs 3,770 cr from over 600 stash holders

  Black money: Govt collects Rs 3,770 cr from over 600 stash holders 

Government today said it received an amount of Rs 3,770 crore from 638 declarations under the one-time black money compliance window that closed yesterday.
“638 number of declarations have been received under the compliance window declaring undisclosed foreign assets amounting to Rs 3770 crore. These figures are subject to final reconciliation,” the Finance Ministry said in a statement based on figures provided to it by the CBDT.
It added that tax at the rate of 30 per cent and penalty at the rate of 30 per cent is to be paid by December 31, 2015.
The window, created under the new anti-Black money Act, saw a hectic rush on the last day yesterday as declarants made a beeline to meet the deadline at the only I-T office designated here for the task.
 “Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (the Act) has been enacted to deal with the menace of black money stashed abroad.
“The Act also provided for a compliance window for a limited period to persons who have undisclosed foreign assets which they had not disclosed for the purposes of Income-tax so far,” the statement added.
The compliance window opened on 1st July, 2015 and was till 30th of September 2015. It said the officer designated to receive declarations worked till midnight even as the e-filing portal was also open till midnight to receive the declarations.
-01 October 2015 | PTI | New Delh