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Income Tax Department launches Operation Clean Money-II

The Income Tax department has launched the second phase of the ‘Operation Clean Money’ to investigate over 60,000 individuals with an aim to detect black money generation post demonetisation. The Central Board of Direct Taxes (CBDT), the policy-making body of the income tax department has detected flow of black money into the banks amounting to over Rs 9,334 crore between November 9, 2016 and February 28 this year.

Under the second phase of Operation Clean Money, more than 60,000 persons including 1,300 high risk persons has been identified for detailed investigation. The department has deducted more than 6,000 transactions of high value property purchase and 6,600 cases of outward remittances.

The first phase of ‘Operation Clean Money’ was launched on January 31, 2017. In the first phase, the department went through e-verification of large cash deposits into the banks after the demonetisation and had sent online queries and investigated around 17.92 lakh persons.

Significance

  • This operation will help in eliminating black money and widen the tax base.
  • The impact of the operations carried out by the income tax department has resulted in a 21.7% increase in the income tax returns in the financial year 2016-17. Also, 16% growth in the gross collection has been observed, which is the highest in the last five years. Besides, 14% growth in net collection has been realized, which is the highest in the last three years.

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CBDT inks 10 more Advance Pricing Agreements

The Central Board of Direct Taxes (CBDT) has entered into 10 more Advance Pricing Agreements (APAs) pertaining to various sectors of economy like Telecom, Banking & Finance, Pharmaceutical, Steel, Retail and IT etc

It includes 7 Unilateral APAs, 2 Bilateral APAs with the United Kingdom and Japan. Seven of these Agreements have Rollback provisions in them.

With this, the total number of APAs entered into by the CBDT has reached 140. It includes 130 Unilateral APAs and 10 Bilateral APAs. In current FY 2016-17, 76 APAs (61 Unilateral and 7 Bilateral APAs) were signed.

About Advance Pricing Agreements (APAs) scheme

  • The Union Government had introduced the APA Scheme in the Income-tax Act in 2012 and the “Rollback” provisions were introduced to it in 2014.
  • The scheme endeavours to provide certainty to taxpayers in domain of transfer pricing issues by specifying the methods of pricing and setting the prices of international transactions in advance.
  • The progress of APA Scheme appreciated nationally and internationally strengthens Government’s resolve of fostering a non-adversarial tax regime in a fair and transparent manner.

Transfer pricing: It is referred to the fixing of the price for goods and services sold in transactions between related legal subsidiaries (entities of a big company) based in different countries within an enterprise. It affects cash flow, investment decisions and performance indicators from a multinational company point of view. It affects the amounts paid as corporate tax to the Government.

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