The Prime Minister, scrapped 500 and 1000 Rupee notes, as of midnight, November 8th 2016. This move dealt a heavy blow, to black money hoarders in India and will break the back of corruption, in the country.Terrorism flourishes in India, due to fake currency. Studies have shown that fake currency of around INR 400 Crores, is in circulation in the economy. Most of the fake currency is in 500 Rupee notes. With the scrapping of 500 Rupee notes, terrorism is India, really suffers.
The Government has given citizens, time till December 30th 2016, to deposit 500 and 1,000 rupee notes with banks. However, the Government wants to stop citizens using this 50 day window (time period), to convert black money to white. Any unexplained big cash deposits, will be charged tax and a 200% penalty, on these cash deposits. This can happen even before you file ITR (Income Tax Return). The Government is taking the black money hunt, to the next level. Let’s take a look at some of the new rules, which are making life extremely difficult, for black money hoarders. Want to know how to file income tax returns? Just contact IndianMoney.com. Our commitment is to help you “Save, Invest, Spend and Borrow Consciously." IndianMoney.com offers Free, Unbiased and on-call financial advice on Insurance, Mutual Funds, Real Estate, Loans, Bank Accounts and Capital Markets.
Many citizens are making multiple cash deposits in their bank accounts, without quoting the PAN. The limit of cash deposit without PAN, is up to INR 50,000 per transaction. Citizens having black money, are depositing less than INR 50,000 a day, to escape showing PAN details. The Finance Ministry has said that if you deposit cash in 500 and 1000 rupee notes at the bank up to INR 2.5 Lakhs, your details will not be reported to the tax department.
The Government has issued a circular. Deposits made between 9th November 2016 and 30th December 2016 will require PAN, if the combined sum you deposit, exceeds INR 2.5 Lakhs.
Let’s say you deposit INR 40,000 per day, in 500 and 1000 rupee notes for 7 days. You have deposited INR 2.8 Lakhs in the bank. The combined sum you deposit, exceeds INR 2.5 Lakhs. You have to show PAN and the tax department is interested in the source of income. Now you cannot escape showing PAN, if you make multiple cash deposits, in amounts less than INR 50,000 a day.
SEE ALSO: Aadhaar Card Check Online
You were allowed to exchange old 500 and 1,000 rupee notes at the bank, up to INR 4,000. If you exchanged more than INR 4,000, the excess amount would be credited to your bank account. The exchange limit was raised to INR 4,500 for old 500 and 1000 rupee notes.
Be prepared for a shock….From Friday, November 18th 2016, you can exchange only up to INR 2,000 in old 500 and 1000 rupee notes, at the bank.
SEE ALSO: Term Insurance: How to buy the right term insurance plan?
Jan Dhan Accounts used to launder money
PMJDY Accounts, are at the heart of financial inclusion in the country. Ironically these Jan Dhan Accounts, are being used by black money hoarders, to launder illegal black money. There are 25 crore Jan Dhan bank accounts in the country. Black money hoarders are using Jan Dhan bank accounts of the poor, to deposit unaccounted black money. This money will then be withdrawn at a convenient time.
The poor of our country, get money for this service. This is an easy way to convert black money to white.Many Jan Dhan bank accounts, which were dormant for months or years, are now brimming with cash. Many of these Jan Dhan bank accounts, have money more than INR 50,000.
Now, Jan Dhan account holders, are allowed to deposit up to INR 50,000 into these accounts in cash. If deposits above INR 50,000 are made, their source will be verified.
Finally…here’s an innovative idea, made by the Government, a couple of days back. Citizens are exchanging old 500 and 1000 rupee notes, at different banks showing different ID Proofs. You can show PAN, Election Card or Aadhaar while exchanging currency notes. Banks will mark citizens, exchanging old 500 and 1000 notes, with indelible ink, similar to that used during elections. Now citizens with black money, cannot come back multiple times, to exchange old currency and choke bank queues. Be Wise, Get Rich.
Mr. C S Sudheer is the founder and CEO of IndianMoney.com – India’s largest Financial Education Company. He started his career with ICICI Prudential Life Insurance and later on worked with Howden India. After his brief stint in Howden India, he moved on and incorporated Suvision Holdings Pvt Ltd which is the sole promoter of IndianMoney.com. He aims to build a nation that is financially literate with investment savvy citizens.
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