Operation Clean Money-Traders top cash depositors during demonetization period

Operation Clean Money-Traders top cash depositors during demonetization period. Income Tax Thematic Report on Taxpayer Segment Analysis

The Income Tax Department on the occasion of launch of Operation Clean Money Portal by Finance Minister placed Operation Clean Money (OCM) Thematic Report #1 of May, 2017 related to Taxpayer Segment Analysis which is as under:

Objective
Provide an overview of share of cash deposits (during the period 9^th Nov to 30^th Dec 2016) for various taxpayer and business segments.

Methodology

1. Account level deposit information from banks and post offices was aggregated for the PAN.

2. The reported cash transactions of banks were removed to avoid double counting.

3. PAN holder was classified in broad taxpayer segment as under:

4. PAN holders doing business were classified on the basis of nature of business mentioned in the last available return.

Limitations

1. Analysis is based on only reported cash transactions (not all cash transactions).
2. Reported cash transactions include both old and new currency deposited during the period.
3. Account level information without valid PAN has been excluded from this analysis.
4. Analysis is based on return available in systems (some returns may not be captured or verified).
5. Taxpayer segment classification based on return data may not be accurate.
6. The analysis may change on receipt of additional information.
7. Reported cash transactions may contain wrong PAN or amounts which may be revised
8. If taxpayer is engaged in more than one nature of business, only the first business was considered for analysis.

Taxpayer Segment Analysis
This section contains breakup of reported cash deposits for various taxpayer segments. Table 1 provides percentage of ‘distribution of PANs and ‘total cash deposit’ across taxpayers segments. Further, the table provides average reported cash deposits per PAN for taxpayer segments.

Table 1:Taxpayer Segment Analysis 

Salient Features

• Corporates which account for 2% of the reported PAN have a share of 22.6% in the reported cash transactions.
• Proprietors (individual running business) have a share of 41.5% in the reported cash
• Taxpayers doing business have a share of 78.4% in the reported cash transactions.
• 1% of the PAN holders in the reported cash transactions have not filed return.

Business Segment Analysis
This section contains breakup of reported cash deposits relating to business for various business segments (as mentioned in ITR by taxpayers). The following table provides percentage of ‘distribution of PANs and ‘total cash deposit’ across nature of business. Further, the table provides average cash deposits per PAN by nature of business.

Table 2: Business Segment Analysis

Salient Features

• Traders have the largest share (around 61%)in the reported cash transactions relating to business.
• Manufacturers have a share of 12% in the reported cash transactions relating to business.