Like every year, the deadline for filing your tax return is July 31. However, what’s unique about this Assessment year is the Income Declaration Scheme—a scheme which allows the tax evaders to disclose their unaccounted income/assets and in return offers protection against any prosecution under Income Tax and Wealth Tax laws. If you think, the fight against black money ends there, you are probably missing the larger picture.

The real battle against the black money begins here…
Cash circulation in the system is the biggest source of creation of black money. India has an enormous unorganised market across industries and geographical areas. Right from candy to a piece of land, you can buy anything paying hard cash. That’s actually the root cause of black money creation. As per the estimates of Economic Times dated July 22, 2016, a yearly turnover of India’s cash transactions amounts to massive US$ 460 billion—higher than Argentina’s GDP. None of the Government agencies can monitor these transactions, and as they are not accounted anywhere, it’s difficult to assess the ones who have high cash reserves.
 

What’s the solution to this?

Recently, a Government appointed investigation team of retired judges submitted its report. Like in the past, this time too its suggestions were extremely worthy. One of them has attracted media attention. The team has suggested that the Government should ban all transactions above Rs 3 lakh, and the Government should also make it prohibitory for people to hold cash above Rs 1.5 lakh.

The Government and also RBI has been encouraging citizens to opt for cashless transactions. The RBI Governor recently made a point that India spends close to US$ 335 million in just transporting cash in the banking system to across rural areas. Technology-enabled solutions such as “unified payment interface” are expected to help save this cost. Authorities also believe that promoting cashless transactions and facilities such as money transfers using mobile phones will contribute to reducing the cash circulation thereby nipping the generation of black money.

In western countries, cashless nature of transactions is common. As a proportion of total transactions, about 80% transactions are cashless in U.S. Some European countries have as high as 93% cashless transactions as a percentage of total transactions. So the suggestion of the investigation committee in India is not a unique or out of the box and much in line with global practices. However, the real question is, are we confused and mimicking our western counterparts blindly?

Well, the answer will depend on how seriously the Government and RBI discourage the use of cash. Some questions that would require clarifications from all political parties supporting the cashless economy to fight black money.

The questions are

• Will they take strict actions on members of their parties who have been found guilty in corruption cases?
• Will they insist on bringing back black money stashed by their leaders abroad?
• And most importantly, will they stop accepting donations in cash?
• Will they stop the vote-for-cash politics?

Unless these questions are answered clearly, it will be difficult for anyone to believe that India is serious about fighting the circulation of black money.

PersonalFN always appeals its readers andthe investors to declare all income from all sources and pay tax dues in time along with filing return before the deadline.

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