NEW DELHI: The demonetisation saga continued on Sunday with the Income Tax department warning of dire consquences if unaccounted money is deposited in other people’s bank accounts and Prime Minister Modi claiming his initiative has stunted the flow of black money. “What happened to all that money collected in exchange for a party ticket or an MLA seat? It is now invalid,” Modi said at a rally in Agra on Sunday.
The Prime Minister also claimed that Rs. 5 trillion has, so far, been deposited in bank accounts across the country. Taking a cue, senior banking officials predicted that the surge in bank deposits could further lower the interest rates, meaning your earnings would grow at a slower rate.
The IT department has decided to slap charges under the newly enforced Benami Transactions Act against anyone found guilty of parking their unaccounted money in other people’s accounts. That would involve a penalty, prosecution and even a rigorous jail term of a maximum seven years.
The Act also empowers the taxman to confiscate and prosecute both the depositor and the owner of the unaccounted cash. The IT department also claimed to have detected over `200 crore in black money after 80 surveys and 30 searches since November 8. A sum of `50 crore has been seized so far. Sources speaking to agencies also claimed the department has launched a country-wide operation to identify suspect bank accounts that saw a sudden surge in deposits. Charitable and religious trusts have also been asked to furnish their account balances after widespread reports of money laundering attempts by such organisations.
Additional liquidity that is coming into the system is unlikely to leave in a hurry and hence may pull down interest rates further, news agency PTI reported quoting a senior SBI official. On the one hand, this would mean lesser return on deposited money, while on the other, loans could get cheaper. Already, many top banks have slashed interest rates on fixed deposits by up to 1 per cent.