As the dust begins to settle on demonetization and the taxman hunts for unexplained money, there is a lurking concern among practitioners and senior levels of the tax office as to how harshly the new law would be used.
Money borrowed from a friend, jewellery inherited from great grandmother, gifts, capital received by a small businessman, amount spent in daughter's wedding or in regular household expenditure can be questioned and taxed at a far higher rate if someone fails to offer a "satisfactory explanation" to the tax officer.
Indeed, a person may have to cough up as high as 83% -- as against 35% in the past -- if the I-T department doubts such 'income' or 'expenses'.
"We have discussed the matter among ourselves. It's a strong provision in the (Income Tax) Act and the department would find it handy in mobilising tax from black money. But there are chances that it may be misused," said a senior tax official in Mumbai which accounts for the highest direct tax collection. According to senior chartered accountant Dilip Lakhani, in a loan received the assessing officer can always question the credit worthiness of the lender or describe family jewellery (beyond 500 gms) as unexplained investment.
This year, the government decided to advance the Union Budget presentation to February 1, doing away with a decades-old practice of presenting it on the last working day of February. Prime Minister Narendra Modi had said that this would allow for the Finance Bill to be passed early and make funds available on time.
The Opposition parties had sought postponement of the Budget on the grounds that the ruling government could announce sops for the states in line for elections and sway the votes.
While dismissing the petition, filed by Manohar Lal Sharma, the Supreme Court said, "There is no illustration to support that the presentation of the Union Budget would influence voters' mind in state elections."
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