Govt bars cooperative banks from accepting deposits under new tax amnesty scheme

New Delhi: The government has barred cooperative banks from accepting deposits under the new tax amnesty scheme PMGKY, a move that comes amidst the Income Tax department uncovering anomalies post demonetisation.

After junking old 500 and 1,000 rupee notes, the Centre had come up with an amnesty scheme for holders of unaccounted cash by asking them to pay 50 percent tax and parking one-fourth of it in a no-interest bearing four-year deposit.

This deposit could be made with any banks. But now cooperative banks have been barred from accepting such deposits. The PMGKY scheme is open till March 31.

"Application for the deposit in the form of Bonds Ledger Account shall be received by any banking company, other than Co-operative Banks, to which the Banking Regulation Act, 1949, applies," the government said while amending the notification for Pradhan Mantri Garib Kalyan Yojana (PMGKY), 2016.

Under the scheme, holders of unaccounted cash willing to avail the offer will have to first pay the tax amount and then fill up a challan form provided by the bank for availing the four-year deposit scheme.

The authorised banks have to electronically furnish the details of deposit to the Revenue Department on the next working day to enable information verification of the deposit before accepting the declaration under the PMGKY.

Full confidentiality of the data would be ensured by the RBI and authorised banks.

The amendment to the notification comes after the I-T department spotted irregularities in deposits of cooperative banks following demonetisation.

The the I-T department's investigation revealed that deposits in the books of certain cooperative banks were in excess of the physical holding of the now-defunct 500 and Rs 1,000 rupees currency notes.

Initially cooperative banks were allowed to take deposits of old currency notes and as per estimates, about Rs 16,000 crore was deposited. But six days into demonetisation, the RBI barred these banks from exchanging old currency notes or accepting deposits.

After the shock demonetisation of 500 and 1,000 rupee notes on November 8, the government had asked holders of such currency bills to deposit them in bank accounts by December 30. An estimated Rs 15.44 lakh crore worth such high denomination notes were in circulation.

While the RBI has not made it public the exact amount of junked notes that were deposited, there are reports that close to Rs 15 lakh crore has already come back.

The tax department, in order to crack down on money laundering, has asked banks to report deposits in any account aggregating Rs 10 lakh in a year, as well as cash payments of Rs 1 lakh or more on credit card bills.

Also banks have been asked to furnish data about deposits exceeding Rs 2.5 lakh made during November 9-December 30 period. They have also asked banks to collect PAN details of all account holders, except in case of Jan Dhan accounts.

Also it has come to the notice of the government that an estimated Rs 3-4 lakh crore of tax-evaded income could have been deposited during 50-day window that ended on December 30.

After in-depth analysis, these reports have been disseminated to Income Tax Department, the Enforcement Directorate (ED) and other Law Enforcement Agencies.

Starting from November 8, 2016 various reports were called for from the banks based on different threshold of cash deposits made by different categories of persons. The reports were collated and analysed based on intelligence which has been available in the government data bases.

Also, the I-T Department and ED have been provided with the details of cash deposits of more than Rs 16,000 crore in different accounts of various kinds of Cooperative banks.