Delhi conceals its income best

Just one tax measure - the banking cash transaction tax (BCTT) - has unearthed concealed income worth Rs 3,600 crore in Delhi. Other cities too have concealed income figures, though they are nothing in comparison to the capital's.

The income-tax department found such accounts in various banks in the capital, including the Federal Bank, the Punjab National Bank, and the State Bank of Mysore. Over 355 banks across the country are covered by the BCTT, under which they are required to provide monthly returns, listing the number of transactions and the taxes paid.

Between June 2005 and March 2006, the government collected around Rs 320 crore by way of this tax. BCTT is levied at a rate of 0.1 per cent on cash withdrawals from an account (other than a savings account) or withdrawal of term deposits of more than Rs 25,000 in case of individuals or Rs 1 lakh for other persons on a single day.

A survey conducted on some account holders in the Federal Bank branch at Fatehpuri in Delhi revealed concealed income of over Rs 1,500 crore. In this case, three groups were found discounting bank drafts of parties from other states visiting Delhi for purchases.

These drafts were used to carry black money from outstation places, and payments to sellers in Delhi were made in cash after the drafts were discounted by these groups.

Another survey involving seven account holders of the Punjab National Bank branch located on Lawrence Road revealed that these persons were issuing bogus sales bills to flour and dal mills of Delhi without actual sales taking place. Bogus purchases of Rs 380 crore through 38 parties have been revealed so far.

The department has issued fresh guidelines to select cases for investigation under BCTT. Field formations have been asked to examine cases wherein there are two or more accounts with the same address.

Such cases need to be selected as they may belong to one group or family. Similarly, accounts of individuals or small concerns withdrawing large amounts have to be given preference in selection.

Field formations have been advised to make inquiries to know the business involved and ascertain the need for cash withdrawal before taking any action.

Officials have been asked to select cases in which there is no evident relationship between a cash withdrawal and the nature of business.