Scanner on IT status- limit to which tax may be exempted in NE states

Avishek Sengupta, TT, Guwahati, Nov. 30: Income tax officials here feel that the provision that allows tax exemption to tribal communities in the Northeast will be done away with.

"There will be a limit to which tax may be exempted and there will be slabs to decide the tax ST people will have to pay. The slabs will, however, be more than what is applicable to normal taxpayers," an official said. When asked, the spokesperson for the Union finance ministry in New Delhi denied any such move.

The exemption limit for a general taxpayer is 2.5 lakh per annum. The slabs for general taxpayers are 10 per cent for those who earn between Rs 2.5 lakh and Rs 5 lakh, 20 per cent for those earning between Rs 5 lakh and Rs 10 lakh and 30 per cent for earnings above Rs 10 lakh per annum. "Just as ST candidates get relaxation for jobs, there will be relaxation for tax, too, but there certainly will be an upper limit," another official said.

In the Northeast, members of Scheduled Tribes permanently residing in any area in the states of Nagaland, Manipur, Tripura, Arunachal Pradesh and Mizoram and in certain areas of Assam and Meghalaya (district councils or regional councils created under the Sixth Schedule) and generating income from within their respective states are exempted from paying income tax under Section 10 (26) of Income Tax Act, 1961.

"This section might be amended to avoid unaccounted money being hoarded in these areas. The section exempts underprivileged tribal communities from tax so that they can develop but anyone having a higher income than Rs 10 lakh or Rs 15 lakh per annum is not underprivileged. They need to pay taxes. The amendments will be done in accordance with constitutional procedure. If approved by Parliament, it will be implemented," said an official.

The move follows the recent seizure of Rs 3.5 crore in demonetised notes of a leading Nagaland businessman, Anato Zhimomi, from Dimapur by a Guwahati-based income tax team.

Income tax officials suspect this was an effort to park "unaccounted" money in invalid currency, belonging to a north Indian businessman, in Nagaland through Zhimomi post-demonetisation.

IT sources suspect Zhimomi received Rs 11 crore in four instalments, brought to Nagaland from Haryana on a chartered flight and deposited in his account. He returned through account transfer around Rs 4 crore in three instalments. The department later also seized more than Rs 4.7 crore from Zhimomi's Axis Bank accounts in Dimapur. IT officials have interrogated Zhimomi and Gurgaon-based industrialist Anil Sood regarding the money.

"We are following the money trail. We believe it was a nexus and several other businessmen are also involved," the IT official said.

The directorate-general of civil aviation yesterday barred chartered flight service providers from carrying demonetised Rs 500 and Rs 1,000 notes.

People are lauding the Centre's decision to demonetise high-value currency notes, saying it will help thwart money laundering in the tribal areas. "It was a common practice even back in 1978, when the Centre first demonetised high-denomination notes, with rich people from other parts of India parking their money in tribal people's accounts. At least this will stop," said Nurul Islam Laskar, a retired banker.

Madan Chakma, an employee of the United Bank of India in Tripura, said, "We see tribal people depositing high value currencies and we know that this is not their income but we have to accept the deposit anyway. This unaccounted money fuels all kinds of unscrupulous activities and insurgency in the Northeast".