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Illegal Cash Deposits To Face 7 Year Jail Term?

Mr. C.S. Sudheer | Posted On Monday, November 21,2016, 03:06 PM

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Illegal Cash Deposits To Face 7 Year Jail Term?



The Prime Minister Narendra Modi, had scrapped 500 and 1000 rupee notes, as of midnight, November 8th 2016. The aim of this move:

  • Citizens hide black money in 500 and 1000 rupee notes. If these 500 and 1000 notes are scrapped, it’s very difficult to hide black money. Black money fuels corruption in the economy.  This move breaks the back of corruption in the country.
  • There is plenty of fake currency, circulating in the economy. Most of these fake notes are in 500 rupee notes. Value of fake currency circulating in the economy, is around INR 400 Crores. Fake notes support terrorism in India.

Many of our citizens are flush with black money. Black money in 500 and 1000 rupee notes, is coming out of mattresses and walls. Now a highly profitable business is really doing well…Money Laundering….Yes, the poor citizens of our country, are being used by the black money hoarders, to convert black money to white.

There are plenty of poor citizens, willing to help convert black money to white, in exchange for a commission. The Government wants to put an end to this. Let’s see what the Government is doing, to put an end to this illegal practice. Want to learn more on tax planning? Just contact Our commitment is to help you “Save, Invest, Spend and Borrow Consciously." website. offers Free, Unbiased and on-call financial advice on Insurance, Mutual Funds, Real EstateLoansBank Accounts and capital markets

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How poor are used to convert black money to white?

Sharmila is 45 years old and stitches clothes to earn a living. Let’s see how citizens like Sharmila, are used to convert, black money to white. For the past few years, Sharmila used to make ends meet, stitching clothes. After the 500 and 1000 rupee notes were banned, Sharmila’s business began to dip. Sharmila grew desperate….This is when Sharmila got an offer….Cash deposits in 500 and 1000 rupee notes, would be made to her bank account. Sharmila would get some money for allowing her bank account, to be used this way.

Sharmila has almost no money in her bank account. The tax department does not ask any questions, if cash deposits up to INR 2.5 Lakhs are made. PAN card details need to be compulsorily submitted, if cash deposits exceed INR 50,000 a day. Citizens like Sharmila, are an excellent tool to convert black money to white.

The money deposited in Sharmila’s bank account, will be withdrawn at INR 24,000 a week, as per Government bank limits. This money is now white. Sharmila gets money for letting unscrupulous citizens, use her bank account. Sharmila can survive, in spite of her tailoring business not doing too well.

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How daily wage laborers are used to convert black money to white?

Let’s say a citizen wants to convert black money to white. He gives INR 10 Lakhs to a money launderer. The money launderer goes to a labor hub to find daily wage workers, unsure of getting employed on that day. A daily wage laborer could earn INR 500 a day. The money launderer gives the daily wage laborer INR 500, just to stand in the bank queue and deposit cash in their accounts in old 500 and 1000 rupee notes.  Cash deposits above INR 50,000 require PAN. The tax department asks no questions, for cash deposits up to INR 2.5 Lakhs.

A daily wage worker, has no money in his account. He becomes an easy target to these unscrupulous elements. Cash deposits are made in a daily wage workers bank account and withdrawn up to INR 24,000 a week, from the bank. The daily wage laborer is than paid a commission, for his services. Each daily worker can deposit INR 2 Lakhs to INR 2.25 Lakhs in his bank account. Several such daily wage laborers can be used.

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Illegal cash deposits to face jail term?

The Government has given a stern warning to citizens, depositing unaccounted black money, in someone else’s bank account. Charges will be slapped on such citizens, under the newly enforced Benami Transactions Act. There will be a penalty, prosecution and a rigorous jail term, up to a maximum of seven years.

What’s the benami transaction act? If an arrangement is made where a citizen deposits old currency of INR 500 and INR 1000 in the bank account of another citizen, with an understanding that the account holder will return the money, this is a Benami Transaction.The income tax department has launched a country wide operation, to identify suspect bank accounts, where huge cash deposits are made, after November 8th 2016. There’s more…Under the newly enforced Benami Transactions Act, both the depositor who allows his account to be used to convert black money to white and the person whose illegal money is being converted to white, will be prosecuted. This money will also be confiscated.Citizens like Sharmila could face a penalty, prosecution and a 7 year jail term, for allowing their accounts to be used for money laundering.

Yes…The new benami transactions act, catches both…the citizen who wants to launder money and the citizen who helps him launder money, by allowing the use of his bank account. Punishment…a jail term of 7 years. Now, many citizens are afraid of a jail term. Yes…changing black money to white, is getting really difficult.

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