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| January 20, 2017 |
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Impact 
Those who challenged the capabilities of the Income Tax department (IT) and stashed large amounts of money in their bank accounts, post demonetisation, are about to receive a rude shock in the coming days.
Lately, all arrows point to the IT department preparing for a major surgical operation. The ground level preparations had started soon after the demonetisation went into effect. The time for the final act has dawned. In a notification dated January 17, 2017, the Central Board of Direct Taxes (CBDT) has categorically asked banks to share details about the cash transactions of account holders.
Within a few weeks from now, every account holder who has deposited over Rs 12.5 lakh in his/her current account between November 9, 2016 and December 30, 2016, will come under the scanner of the CBDT. All current accounts in the name of the same entity will be clubbed for this purpose. Moreover, aggregate deposits in one or more savings or any other non-current accounts of a person amounting to Rs 2.5 lakh will also be under the lens of CBDT and ED (Enforcement Directorate). For such accounts, the bank will have to report cash transactions of account holders for two time periods. One, from the beginning of the Financial Year (FY), 2016-17 i.e. from April 1, 2016 to November 8, 2016 and also for the period between November 9, 2016 to December 30, 2016.
This comes at a time when disillusioned citizens are curious to know how the country has realistically benefited from this “test-by-fire” of such an unprecedented magnitude. Good news is, we might be closer to knowing something substantial.
Some interesting revelations have been that the dormant accounts have received cash deposits worth Rs 25,000 crore, while the repayment of old loans in demonetised currency has been to the tune of Rs 80,000 crore. Moreover, there are nearly 60 lakh accounts that have received more than Rs 2 lakh each between November 9, 2016 and December 30, 2016. Out of these, almost 6.8 lakh accounts were already marked as suspicious in the database maintained by various Government agencies, as reported by The Hindu dated January 10, 2017.
It seems 1.5 lakh such accounts might have received more than Rs 10 lakh between November 9, 2016 and December 30, 2016. Holders of these accounts will have to disclose the source of such income and justify deposits. Authorities will also consider specified deposits even in regional rural banks and cooperative banks.
The tax department has been using advanced data analytics to identify inconsistencies in the payments and receipts of bank account holders. And has already clarified that it suspects Rs 3 lakh crore to Rs 4 lakh crore worth of cash, out of total money deposited in banks post demonetisation, may have come from the tax evaders.
Demonetisation has enabled taxmen to build a massive database. Now it remains to be seen how they utilise it. Can the Government manage to put a lid on its brazen taxmen, especially the ones who demanded some ‘cuts’ to release tax refund orders? If data is used for its real purpose, the IT department will have a solid chance to apprehend tax evaders red-handed. Else, the creation of such massive data bank would be nothing more than a blackmailing tool.
Considering the total available data points so far, it seems the tax authorities have taken enough care that the genuine citizens and honest taxpayers won’t suffer. Only about 2.5% of total accounts under scanner will be targeted initially. This is just a beginning and not the end.
Depending on the initial success in identification of accounts, the tax department and other related Government authorities may dig deeper in days to come.
So far so good.
Read carefully how the tax department is going to keep track of your spending habits...
As per the Income tax circular dated January 17, 2017, banks and other concerned entities will report to the tax department transactions that confirm with values and nature mentioned below
- Purchase of bank drafts or pay orders or banker's cheque for an amount aggregating to Rs 10 lakh or more in a financial year.
- Payments made in cash aggregating to Rs 10 lakh or more during the financial year for the purchase of pre-paid instruments issued by Reserve Bank of India under section 18 of the Payment and Settlement Systems Act, 2007 (51 of 2007).
- Cash deposits or cash withdrawals (including through bearer's cheque) aggregating to Rs 50 lakh or more in a financial year, in or from one or more current account of a person.
- Cash deposits aggregating to Rs 10 lakh or more in a financial year, in one or more accounts (other than a current account and time deposit) of a person.
- One time or more deposits (other than a time deposit made through the renewal of another time deposit) of a person aggregating to Rs 10 lakh or more in a financial year of a person.
- Payments made by any person for an amount aggregating to Rs 1 lakh more in cash or Rs 10 lakh more by any other mode, against bills raised in respect of one or more credit cards issued to that person, in a financial year.
- Receipt from any person of an amount aggregating to Rs 10 lakh or more in a financial year for acquiring new bonds or debentures, buy shares in the primary market or buying new units of mutual funds.
- Receipt from any person for sale of foreign currency including any credit of such currency to foreign exchange card or expense in such currency through a debit or credit card or through issue of traveller's cheque or draft or any other instrument of an amount aggregating to Rs 10 lakh or more during a financial year.
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Impact
You might go to buy your favourite cake. But unless you are buying from the original manufacturer or its franchisee outlet, you always run a risk of ending up with something inferior.
It seems something similar has happened in case of Bharat Interface for Money (BHIM) App—a digital payment solution. If a Mumbai-based cyber security expert is to be believed, the BHIM App has a threat of duplication. “The BHIM app is written in a very amateur way and the entire code is unprotected, which means it can be easily downloaded and modified by anyone.”
Should you be worried?
If you download the BHIM App from any source other than National Payments Corporation of India (NPCI), you might be probably compromising on your data security. You never know, the code might have been modified in a way to gain access to all your personal information including the sensitive data such as bank details, app pass-key etc. However, if you have downloaded the app from NPCI, you need not worry.
The app has a multi-level security features, according to Saket Modi, CEO and co-founder of Lucideus Tech, IT Risk Assessment and Digital Security Services provider.
Speaking about the security quotient of the BHIM App, Mr Saket Modi said, “From a consumer point of view, there are three levels of authentication that are required in this app. One is the device ID and mobile number, then the bank account which you are linking to this app, and the finally the UPI Pin which is needed to complete the transaction. There are three factors of authentication versus a normal net banking app or a chip-pin debit card which will only have two factors of authentication.”
As per his assessment, “Even if your phone gets stolen nobody can transact, until they know your UPI pin.”
He further added that, “Encryption for BHIM is in line with what a Google Wallet or Apple Pay will be using.”
If you are using the right app, you may continue to use it, however, if you had downloaded BHIM from any unofficial source, you might want to delete it and install the original one.
If you wrote your secrets on a public platform and if somebody cracked your winning formula, whom would you blame?
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Impact
Five Indian states are going into elections in 2017. There is a lot to win and lose for political parties. Total 690 seats are at stake. The next year will be even more significant as 7 states will be conducting elections, and the battle will be for 964 seats.
On this backdrop, the Union Budget 2017-18 to be presented on February 1, 2017 remains one of the most crucial and a much-awaited event. This time, the Government has preponed the budget by over 3 weeks of its usual schedule.
Adv. M.L. Sharma, an Indian lawyer known for filing a series of Public Interest Litigations (PILs) had filed a PIL demanding that the Union Budget 2017-18 should be deferred until the last phase of State elections is not concluded. The elections in 5 States —Uttar Pradesh, Punjab, Uttarakhand, Goa, and Manipur, are to be conducted between February 4, 2017 and March 08, 2017.
However, the Supreme Court has found little merit in the PIL. The Chief Justice of India (CJI) Council questioned the petitioner, “What’s the big deal if budget is presented on February 1 instead of March 1? Which law is violated by this?” The CJI Council also gave a second chance to the petitioner asking him to come “Well Prepared” and noted that, “We tried to find the provision, but we did not get. You show us which provision of the law is violated, which provision of the Constitution is violated.”
The Supreme Court has granted the petitioner time till January 20th to justify his supplication.
The Government has maintained that the Union Budget is a constitutional exercise that affects the entire country and not only the States that are going into elections. Following the exhaustive exercise of demonetisation, the Union Budget 2017-18 has become all-important.
Clearly, the expectations from the Union Budget 2017-18 are extremely high, and speculations are rife that it would be a populist one.
To read more about this story and Personal FN's views over it, please click here..
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Impact
Recently the Central Bureau of Investigation (CBI) arrested a few of RBI employees under the charges of helping crooks in the illegal exchange of demonetised currency. Taking a serious note of this lately, the RBI Governor, Dr. Urjit Patel issued a stern warning to RBI employees asking them not to do anything that may hurt the reputation of the central bank.
The RBI Governor was extremely vocal about the topic and sent out an open message to his colleagues. “While on the subject, let me emphasise that one thing we should all zealously guard is the integrity and reputation of our organisation and any act belittling the same should deserve zero tolerance from all of us.”
Unfortunately, the RBI Governor didn’t realise that many have already called RBI’s reputation and integrity into question. Perhaps, he just preferred to remain silent about it. After all, he can’t say something that will place the Government in an awkward position.
Many economists, including some of India’s former RBI Governors, believe, RBI’s reputation is at risk due to flip-flops in implementing the demonetisation policy. The RBI has chosen to remain tight-lipped on almost every question on demonetisation.
The press and Right to Information (RTI) activists have raised many questions seeking the RBI’s swift response. However, contrary to expectations, the RBI has dodged most questions or cited technical compulsions for not offering a response. For example, out of 11 questions, Bloomberg News raised between December 8, 2016 and January 2, 2017; RBI answered only 5. Surprisingly, its reply to the same questions asked at different intervals was inconsistent.
To read more about this story and Personal FN's views over it, please click here.
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Now don't be surprised to see your favourite film star promoting mutual fund investing. In a landmark decision, the Securities and Exchange Board of India (SEBI) has allowed the mutual fund industry to rope in celebrities to promote its products. At least initially the endorsements won't happen at the company or the product level. In other words, The Association of Mutual Funds in India (AMFI) will advertise for the mutual fund industry. This has been a long-standing demand of the mutual fund industry, to be at par in the treatment of celebrity endorsements with banks and insurance companies.
It seems the AMFI, as well as mutual fund houses that struggle to utilise funds bugetted for investor education and protection effectively, will now be able to splurge it on celebrity endorsements. Is that the right way to attract customers? In our opinion, no. But many fund houses in the industry are satisfied with the decision.
How seriously would (and should) the celebrities be taken is another question. Hopefully, unlike in the case of fairness creams known for highly unfair advertisements, the mutual fund industry will be ethical and realistic about its claims.
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Big Data: The growth in the volume of structured and unstructured data, the speed at which it is created and collected, and the scope of how many data points are covered. Big data often comes from multiple sources, and arrives in multiple formats.
(Source: Investopedia)
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Quote: "For a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.
"- Winston Churchill
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