Tax officials to monitor large, unaccounted deposits of ₹2,000 notes

The Reserve Bank of India has allowed the exchange of ₹2,000 banknotes into smaller denominations up to ₹20,000 per transaction.

New Delhi: Tax authorities may scrutinise any sharp spike in deposits of ₹2,000 banknotes in currency chests by bank branches and may take appropriate action against unaccounted deposits as branches have been directed to keep a daily transaction record, two people aware of the development said.

An employee checks ₹2000 currency notes given by customers at a petrol pump in Gurugram. (PTI)

The Reserve Bank of India has allowed the exchange of ₹2,000 banknotes into smaller denominations up to ₹20,000 per transaction, but any attempt to launder large sum in garb of exchange can easily be tracked and such bank branches would have to explain it, they said, requesting anonymity.

“Banks and tax authorities are now equipped with data analytics and artificial intelligence. Hence, exchanging bulk of unaccounted cash without being caught is very difficult. Remember, over ₹1.30 lakh crore unaccounted money was detected months after the November 2016 demonetisation,” one of them said. “Technology has further improved since then.”

Read: Withdrawal of ₹2000 note only currency management exercise: RBI to Delhi HC

The 2016 demonetisation and the government’s drive against black money “brought undisclosed income of about ₹1.30 lakh crore to tax, led to seizure and attachment of assets worth approximately ₹50,000 crore,” the then finance minister Piyush Goyal had said while presenting the interim budget for 2019-20 on February 1, 2019. “As many as 3,38,000 shell companies have been detected and deregistered, and their directors disqualified.”

“As ₹2,000 notes were not commonly used in transactions for quite some time, particularly after the RBI stopped printing them in 2018-19, it is apprehended that bulk of them that are not under circulation could be unaccounted money accumulated through illegal activities or tax evasions,” the second person said. “As per the law, tax authorities and investigative agencies are bound to act.”

People are free to deposit any number of ₹2,000 notes in their bank accounts and the intent is not to harass the common man for their genuine savings, he said. “Bulk deposits beyond a particular threshold, say, over ₹10 lakh may invite explanations if the same is not reflected in the ITR (income-tax return). RBI has specified that deposit into bank accounts can be made without restrictions subject to compliance, which is KYC (know your customer), etc.,” he added.

Read: No need to rush for exchange: RBI Governor Shaktikanta Das on ₹2,000 note ban

The central bank’s instructions to banks is for the convenience of bearers of ₹2,000 notes. Banks are assisting people in both exchanging and depositing these notes without hassle with required necessary documents. But other agencies are equally responsible to nab unscrupulous elements under the income-tax and the anti-money laundering laws, he said. “Possibly, most of the ₹2,000 notes in circulation may return in the system. But, agencies will track sources of unaccounted money like before,” he added.

Honest taxpayers don’t have to panic. They can deposit any amount in their bank accounts and explain it in their ITRs. Tax authorities will scrutinise only suspicious transactions and unaccounted deposits, the first person said. Certain segments are often under scrutiny of tax authorities because of higher chances of unaccounted income. They include real estate, mining, pan masala, gutkka and tobacco industry, bullion and commodity markets, film industry, educational institutes and various professionals, he said.

The central bank on May 19 announced the withdrawal of the ₹2,000 notes from circulation although they would continue to be legal tender. The central bank advised people to deposit or exchange these banknotes by September 30.