PMO asks Income-Tax department to crack down on black money in banks

Crack down on all black money deposited in banks during the demonetisation period. This according to a high ranking government official is the clear mandate given to the income tax department by the Prime Minister's Office, and this instruction was issued within days of the RBI revealing that 99% of the demonetised Rs 500 and Rs 1000 currency bills had returned to the banking system.

Sources say Prime Minister Narendra Modi asked the tax department to prioritise the unearthing of black money in a speech he made to the Finance Ministry's Revenue Department, CBDT and CBEC in a closed door event on Sep 1 and 2. Modi was speaking at the Tax Department's annual event, Rajaswa Gyan Sangam.

The income tax department according to sources will now train its guns on "suspicious" and "unusual deposits" made post the announcement of demonetisation on Nov 8, 2016. It will match such deposits with previous income tax returns to establish unusual activity and also question the source of funds.

Deposits in the Jan Dhan accounts, that had peaked to Rs 64,564 cr during demonetisation are also likely to be under the scanner.

On the other hand, when it comes to the recently rolled-out GST, the tax department has been advised by the Prime Minister's Office to not pull up those who have become GST compliant despite never having filed an IT return.

"The government wants to go easy on those trying to be GST compliant, atleast for the current financial year, even if they have not filed their income tax returns," the official told ET Now.

However, the tax department will not spare all those individuals and companies tat have failed to register with the GST Network.

"The message is loud and clear. Do not go after those that are trying to be tax compliant even if for the first time. Instead, focus on those that are refusing to be GST compiant," said an official to ET Now.