BCTT effective in tracking tax evasion

NEW DELHI: The controversial banking cash transaction tax, that came into effect almost a year back in June 5, 2005, has helped authorities unearth several cases of tax evasion, including the one relating to laundering of around Rs 1,500 cr.

"Enquiries carried out by the Investigation Wing on the basis of BCTT statements have led to unearthing of tax evasion in several cases," said, revenue secretary K M Chandrasekhar.

In this connection, he cited an example of huge cash withdrawal in a branch of Federal Bank of India in Chandni Chowk.

Noticed through the BCTT, it led the Department of Income Tax to three entities which were carrying on the business of purchasing demand drafts from traders at a discount and helping the traders avoid both sales tax and income tax.

These entities would deposit the demand drafts in their own accounts and withdraw the cash, he said, adding that they had laundered around Rs 1,500 cr in a period of 18 months.

BCTT has also helped the Department to detect bogus bills accommodation entries, artificial loss claims and dummy firms, Chandrasekhar said.

The monthly BCT statements are filed by the banks before the Director General of Income Tax (Investigation), New Delhi.

Thereafter, certain bank branches are selected and the information is sent to the jurisdictional DsGIT (Inv.) to carry out further investigation.

The Government has collected Rs 266.88 cr during the first eight months of last fiscal after the levy came into effect. BCTT was imposed for the first time last year as part of the measure to curb black money without providing any amnesty to tax evaders.

There was lot of resistance from various quarters when finance minister P Chidambaram introduced the measure in the budget 2005-06.

He slightly modified the proposal at the time of passage of Finance Bill by sparing savings account from the BCTT and raising the minimum cash withdrawal to Rs 25,000 for individuals and Rs 1 lakh for corporates on a single day in all non-savings accounts.

Any cash withdrawal above these limits will attract 0.1 per cent BCTT as Chidambaram himself had pointed out that the main objective of the tax is to unearth black money and certainly not to generate revenue.

Meanwhile, the authorities have intensified intrusive measures such as search, seizure and surveys, which have led to detection of undisclosed income, Chandrasekhar said.

As many as 3,364 warrants have been issued during 2005-06 following which authorities seized Rs 191.35 cr of cash, Rs 63.45 cr worth of jewellery and Rs 96.88 cr of other assets, totaling Rs 351.69 cr.

The comparative figures of total assets seized during 2004-05 and 2003-04 stood at Rs 202.27 cr and Rs 231.37 cr, respectively.

During the first nine months of 2005-06 up to December, 4,929 surveys were conducted which led to Rs 981.71 cr of additional income disclosed, Chandrasekhar said.