How black money hoarders are using Northeast to outsmart the government

Praveen Shekhar
Praveen ShekharNov 24, 2016 | 16:49

How black money hoarders are using Northeast to outsmart the government

Just within a span of one week, at least two chartered planes from Hisar have landed in Dimapur, raising suspicions that black money hoarders are using the tax exemption status of Naga tribes to convert old currency notes into new ones.

The Central Industrial Security Force on Tuesday apprehended Amarjeet Kumar Singh, a businessman from Munger (Bihar), who had carried Rs 3.5 crore in demonetised currency in a chartered jet. It was reported that the cash had disappeared.


But the cash that disappeared from Dimapur on Tuesday after being flown in by a chartered flight resurfaced on Wednesday in an equally dramatic manner.

The cash, all in scrapped Rs 500 and Rs 1,000 bank notes, is legitimate, certified by the income tax department and has been handed over to the owner - Anato Zhimomi, a Naga businessman.

Director General of Nagaland Police, LL Dungell, said: "A local businessman, Anato Zhimomi, has produced an income tax exemption certificate and claimed the money belonged to him. The businessman being a tribal is entitled to exemption. Income tax officials after detail investigation handed over the cash to him."

Zhimomi is the son-in-law of former chief minister and Lok Sabha lawmaker Neiphiu Rio of Naga People's Front, an ally of the BJP.

Zhimomi, said sources, had given the money to one Amarjeet Singh, a businessman from Bihar, to buy farm land in Haryana. The deal didn't materialise and the money was returned.

Income tax and intelligence officials suspect that the Rs 3.5 crore in scrapped currency notes seized from the chartered flight in Nagaland could be part of a big money laundering racket, with the masterminds exploiting tax exemptions for tribals in the Northeast.

Amarjeet Kumar Singh, a businessman from Munger (Bihar), had carried Rs 3.5 crore in demonetised currency in a chartered jet.

IT department's zonal office in Guwahati has sent a team to probe the matter and cross-check Zhimomi's bank details. The businessman has several business interests in Nagaland.

Last week too, a chartered jet had landed in Dimapur from Hisar. The Haryana police and Hisar aerodrome officials said it was for the Director General of Civil Aviation (DGCA) to check the luggage of people hiring charter planes.

Tax exemption to tribes

Nagas, like all resident tribes of the sixth schedule areas of the Northeast, are exempt from paying income tax.

The tribals of five north-eastern states - Tripura, Manipur, Mizoram, Nagaland and Arunachal Pradesh - are fully exempted from tax under Section 10 (26) of the Income Tax Act, 1961. Tribals within areas of district councils constituted under the sixth schedule of the Constitution are also free from tax liability.

They are entitled to claim exemption from tax in respect of income from any source arising therein, and income by way of dividend or interest on securities.

For availing this exemption, the person must satisfy the following two conditions:

1) He must be a member of schedule tribe as defined by Article 366(25) of the Constitution and,


2) He should be residing any area in the states of Nagaland, Manipur, Tripura, Arunachal Pradesh, Mizoram or districts of North Cachar Hills, Mikir Hills, Khasi Hills, Jaintia Hills and Garo Hills or in the Ladakh region of the state of Jammu and Kashmir. When he starts residing at some other place for any reason, including transfer of employment, he loses the exemption.

A similar exemption is available to all those defined as "Sikkimese" in the I-T Act. This again is for any income generated from Sikkim itself and for income from dividend or interest on securities generated anywhere. The objective behind these exemptions is to provide fiscal concessions to backward areas and communities.

Modus operandi

In times like now, it is this exemption that is apparently being misused to covert black cash into white money.

The modus operandi is simple. Contractors and businessmen from outside the Northeast region routinely use accounts of tribals to conduct their business.

Contracts are drawn up in the name of a local in exchange for a certain commission and the outsider businessmen are able to launder money in the name of local businessmen.

Last updated: November 24, 2016 | 16:49
Please log in
I agree with DailyO's privacy policy