All deposited money not white, says Jaitley

 Amid criticism that the drive to unearth black money has met with limited success, Finance Minister Arun Jaitley on Sunday said that though a large quantum of high denomination currency has been deposited with the banks, the said money cannot be rendered as legitimate cash.

“Black money does not change its colour merely because it is deposited in the bank. On the contrary, it loses its anonymity and can now be identified with its owner. The Revenue Department would thus be entitled to tax this money,” he said in his Facebook post.

There are private estimates of around Rs 15 lakh crore, of Rs 15.44 lakh crore demonetised high denomination notes, having been deposited back with the banks. The government, however, has not come out with any number.

He said that out of a total population of more than 125 crore, only 3.7 crore people filed income tax returns last year, rendering India a hugely tax non-complaint country.

“Only when the governments are able to collect more tax from tax evaders, they are in a better position to collect less tax from everyone else,” he said.

Jaitley said that due to non-compliance, the government has to compromise the expenditures required for poverty eradication, national security and economic development.

Taking stock of the economy after the demonetisation drive completed two months, Jaitley said, the economic activity in the country was getting back to normal. “Drop in economic activity on account of the currency squeeze during the remonetisation period would have a transient impact on the economy. The period of pain and inconveniences is getting over,” he said.

Assessing the impact of demonetisation, he said that in the medium and long term, the GDP would be bigger and cleaner. Money entering into the banking system and officially transacted would give an ample scope for higher taxation. The Centre and the state governments would both stand to gain.

India's tax payers at a glance

Only 3.7 crore assessees of total population of over 125 crore filed IT return
99 lakh out of 3.7 crore declared income below
Rs 2.5 lakh and paid no taxes
Only 1.95 crore declared income less than Rs 5 lakh
Only 52 lakh declared income between Rs 5-10 lakh
Only 24 lakh declared income above Rs 10 lakh