[Sawyer]

Originally Posted by m8002?

Atleast I feel, one should not be dealing with the old currency anymore for any transaction other than the ones allowed by the govt like medicine, utilities and fuel.

This quote is an excellent way of illustrating the legal tender concept. Before demonetisation, it would have been illegal for you to refuse to accept the notes in settlement of a debt and say what you are saying. Now, you are perfectly within your rights to say what you are saying - but nothing stops you from still dealing with these notes. And what would make you able to deal with these even today? If you knew you could deposit these in the bank and get full value for them, and if you knew you would not suffer tax or tax penalty because you had honestly paid your tax dues on any income element included in the transaction of accepting these notes, you could accept these with no fear at all. As is the reported fish monger, or my chemist, or my vegetable vendor. And indeed as I did not stop accepting these. What could stop you? In addition to the worries described above, reading every where including here, that these notes are BANNED, seems to be very effective in stopping you from doing so.

So, it is entirely your choice now. Even if you are a jeweller. But if there is any law that requires you to record the PAN number of who you sold the jewellery to - and I do not know this subject well enough to say more - you will violate that law if you make unrecorded sales.

But here is what is important. If more people panic like you seem to be doing and stop accepting these notes as they seem to have, the more will be the hardship caused by more pressure on the lines in the streets and the more will be the pain of poor and the daily workers.

Originally Posted by rdhawan15

My suggestion for you would be to let the initial heat settle down as it would save time for all those looking to deposit their hard-earned oodles of cash into the Banks.

Very sensible advice, that more ought to take heed of. Let those that are losing a daily living first meet their needs; we can wait till they are served. There is a lot of time till Dec 31 for depositing the old notes, and we tech savvy people can go cashless for months more, without adding to the lines of people exchanging or withdrawing cash. I get a sense that this cash starvation is assuming crisis proportions now across the country, so it is a civic duty to not add any more to the mess, by staying away from banks even for a month more perhaps.

[TD_GHY]

http://www.financialexpress.com/tech...t-know/447027/

People are now searching for ways to remove the indelible ink

After this news had come, length of the queues for exchange has come down, while queues at ATMs almost remain the same.

[avira_tk]

Originally Posted by sachinpk

These people are folks, who would not have seen Rs.5000 as their entire savings in their life time. They have been sent by certain black money hoarders (which the bank staff all know), in a desperate attempt to salvage some black money. How many "poor people" do you think requires Rs.4500 every day, and that too some times multiple times?

Then there were also "poor people" who did have bank accounts in that very same branch. But wanted to bye pass that and just go with this exchange scheme.


The media is clearly downplaying the positive impact of such a move. I don't blame them, because their own sources of advertisement may be from jewellers and realtors, and they are the ones sitting and crying now.

5000 isn't such a huge sum, some people may not look the part but I've seen more than that as savings with my maid nearly 2 decades ago, kept safely on top of our fridge. They have no clue about demonetization and most think that their money is worthless, that gets them desperate, you clearly despise them. Construction workers in Kerala used to send home 5k a month more than 10 years ago, I'm sure they make a lot more today compared to white collar workers, they were and mostly still are outside the banking system. The banks knew and did nothing about the black money, because if you're connected they'll do the needful to make sure you're not inconvenienced like the little people.

The poor people you mention are those blue collar workers in the unorganised sector who never visit the banks where they are treated like dirt, and decided to keep all their money with them, those people will be the ones exchanging their money, more than once. How do you propose they pay their bills, buy a smartphone and start using mobile wallets?

The media has been peddling the government line except two minutes in between when they show a queue at a bank branch not too far from their offices. Jewellery and real estate will continue advertising, can't think of any major advertiser that pays hard cash.

Scamsters throwing money in the trash or burning/shredding it certainly don't deserve sympathy, but don't try to tar everyone with the same brush.

[msdivy]

Originally Posted by Sawyer

I accepted these notes myself, for the sale of my motorcycle, after the demonetisation, so I am not just preaching theory.

After Nov 8th, 500s & 1000s notes have zero value in the market. You have accepted zero value. The choice & risk is yours. If you deposit these notes to the bank now, you would be claiming the transaction was done prior to Nov 8th.

Originally Posted by sachinpk

The shop keepers and many private business establishments do NOT accept Rs.500 & Rs.1000 notes, because if they accumulate a huge lot of them they will have some issues on Dec 31st, 2016.

They are not accepting because Govt has declared them zero value. Yes, any 500s, 1000s accumulated after Nov 8th, they have to explain why they are converting zero value worth notes into actual currency.

Well in that case, my land lord could have deposited the money in his account itself right? Why was he hiding the 5 crores cash deposit? Why was he keeping away from the banking system?

It is up to individual choice on where keep their currency. Some hold cash, some have deposits. Many would have inherited cash. If Govt feels cash is bad, then they must declare anybody holding more than X amount of cash is liable for prosecution. Or they must make it mandatory for every citizen to file income tax returns. Without these legislations, you cannot say someone is guilty just because they do all their business with cash.

PS: Check how Dr JJ was acquitted - http://onelawstreet.com/wp-content/u...5-838-2014.pdf in income-assets mismatch case. Since then there has no change in law to counter such cases.

[Sawyer]

Originally Posted by avira_tk

The media has been peddling the government line

Not quite, see something that has made me very nervous, frankly; to the extent I can only pray that it is all wrong particularly where it talks about the current and potential consequences of cash starvation in a country like India:
http://www.ndtv.com/opinion/pm-modi-...ome-topstories
There are the usual "interesting" comments at the bottom, but what leapt out to me was the one that says the only 5% of the black wealth is held in rupee notes. Again, I have no information that supports or contradicts this statistic, but it is one to be aware of.

Originally Posted by msdivy

The choice & risk is yours. If you deposit these notes to the bank now, you would be claiming the transaction was done prior to Nov 8th.

Of course the choice is mine as is the evaluation of the risk. And I see no reason at all to backdate the transaction as you are suggesting, I am very comfortable in not doing so. Honest people can remain honest and have nothing to fear. As has always been the case.

[sukhoi30]

More than anyone, it is the mainstream media who have let down the people of India. Initially when this was announced, mainstream media was as shocked as everyone else.

Only a couple of channels gave a point by point explanation of how to go about exchanging and depositing your old notes. Many others focused on the difficulties people will find themselves in post reopening of banks. Most also "hinted" that banks were short of cash and ATMs will not have cash. It did not help that banks were closed for a day as by then many

One news channel I was watching was asking people standing in queue negative questions like "How are you feeling standing in queue for such a long time?" or "Are you facing difficulty in standing in queue for such a long time?".

Selective reporting is also rampant. Many channels seem to show only those banks where there are long queues. If you notice most people in such queues seem to be daily wage earners. And I have a strong feeling many must be standing there for some commission being employed by their different agents.

Yesterday when I went to the bank and spoke to an officer, he mentioned that majority people were those who just came to exchange old notes. People depositing old notes into account were very few. They also caught a few people coming to exchange multiple times in the same branch. None of the mainstream media have covered such practices in detail.

In the melee, genuine people with need for cash got affected. In villages and small towns where smaller notes are more in circulation, there is no such scare. I happened to talk to my folks back in my home town and they seem to have taken this entire exercise in their stride. They hardly need Rs. 2000 per week for small expenses.

Bank personnel have been doing a tremendous job of handling every situation. We need to understand that they are not adept in handling crowds, but have still managed to maintain order and peace to a very large extent.

Yesterday, Govt. announced the use of indelible ink for exchanging old notes to check the practice of same person making repeated exchanges from multiple banks. Immediately some mainstream media projected that banks will use indelible ink for withdrawals.

Just look at this report of a prominent newspaper about indelible ink introduction...

http://www.hindustantimes.com/opinio...WyQGphHhP.html

But the move may turn out to be a disaster, especially in the untrained, overworked hands of India’s bankers.

Putting indelible ink is a cumbersome process even in the hands of the meticulously trained election officials and separate counters are created at polling booths, manned by personnel dedicated for the job. Despite this, long queues at polling stations are a common sight.

Putting a mark on a person's hand need some training it seems, especially "overworked bankers".

Instead of easing tension, these mainstream media are adding more tension and just increasing chaos.

Worse, political parties are simply feeding off these reports and narrating back to the people causing more confusion.

[blacksport]

Originally Posted by Sawyer

The very point I am making - although in a country like India, there is also the need for defense and public infrastructure - and one of the longer term things that must be done if current shock treatment is to have a long term result. Rates would also be lower because more people are paying taxes willingly, a virtuous cycle.

I can willingly add infrastructure to that. But do keep in mind that it has increasingly been proved that private built tolled roads work better than govt built roads. We think that only the govt can do certain things. Because we are used to seeing the govt do it. When govt allowed private telecom companies I was skeptical, but see where we are.

That thing aside, I am strongly against all the wasteful schemes that the govt undertake. NREGA? Fuel subsidy? Farm subsidy? Shaadi bhagya? Should it be govt's job to give jobs to everybody, get every girl married? Let people who want to donate money to the poor do that themselves. Why the middlemen?

Originally Posted by rdhawan15

However, for anyone to say that the intent behind demonetization is not positive for the country in the long term is taking it a little bit too far. Unless of course the complainants themselves have oodles of cash that they are unable to dispose of to their own personal and familial benefits.

Trust me, what the govt is doing now is the easiest way to eliminate black money. All pains are with the people. Zero thinking needed. On the contrary, to make the hoarders bring money into the economy through spending is much more difficult and time consuming.

And from the looks of it, it seems that the govt wasn't prepared for the outcome. The cash scarcity has brought the economy to a standstill. It will take weeks before we regain pace. When the dust has settled we'd know whether we really gained anything. I think, for every rupee we gain in tax+penalty on black money we would have lost twice on account of tax lost due to reduced economic activity.

[sachinpk]

Originally Posted by avira_tk

Construction workers in Kerala used to send home 5k a month more than 10 years ago, I'm sure they make a lot more today compared to white collar workers, they were and mostly still are outside the banking system

Why would that be? If they make lot more money than white collar workers, then they have to pay lot more tax! Is the white collar worker given any luxury to avoid tax? The socialist mentality in Kerala; that a construction worker is a poor honest man, while a white collar worker is a rich boorshwa has to get changed. If they play outside the banking system (even when claiming 100% literate), then their reasons could be some thing else.

The banks knew and did nothing about the black money, because if you're connected they'll do the needful to make sure you're not inconvenienced like the little people.

The banks are not law enforcement agencies. Their job is to enable banking. So the investigations regarding black money has to be done by the state police, DRI, and Tax departments. DRI seems to have been more active, while the state folks were happy when black money and hawala route flourished.

The poor people you mention are those blue collar workers in the unorganised sector who never visit the banks where they are treated like dirt, and decided to keep all their money with them, those people will be the ones exchanging their money, more than once.

If these "poor people" only know one way that is to queue up take their daily quota of Rs.4500 and then go away only to come back the next day, then they don't seem to be really very poor. Mind you people have been doing this for nearly 5 days now. There were lot many schemes like JDY which made account opening easy. But none was interested then. Also please understand that bankers are willing to help a genuinely poor person; but they are not fools to sit and serve a "poor man" time and again when they know whom is he representing.

And let us not even open the topic of the "co-operative bank" (glorified chit funds companies run by local politicians) sector in KL. Except the state co.op and the urban co.op banks none of them even operate under RBI guide lines. Yet they want to be considered as "full fledged" banks. Many of them are just a money laundering joint for the hawala operators of the state.

I am not an uber-rich, ultra savvy person with lots of cash who has disdain for the poor. It also pains me when I see that me being an honest tax payer for 15+ years, finds it tough to buy a decent plot of land in KL. All this when supposedly "poorer people", goes for an odd-job in the Middle east, pumps money through the hawala route and has ready cash to make all property deals. And when land registration is done at ridiculous prices and huge amounts go into the pockets of very many "poor people" like Class A gazetted officers, a brigade of clerks and politicians. This black money now hoarded by all these "poor people" have to now come out in the open.

Originally Posted by msdivy

It is up to individual choice on where keep their currency. Some hold cash, some have deposits. Many would have inherited cash.

Agree on the choice part, and also agreed that there is no "inheritance tax" in India. But there is tax when that inherited property is put to use. I would be surprised to know that the inherited cash which the black money hoarders had kept in their cash chest, was just kept there like how they do in museum.

If Govt feels cash is bad, then they must declare anybody holding more than X amount of cash is liable for prosecution.

There were moves to bring in legislation which caps the maximum cash a man can possess. Need to see whether this was rolled out.

Without these legislations, you cannot say someone is guilty just because they do all their business with cash.

I don't think any one has implied that; i.e doing business in cash is illegal. But doing business in cash has its own problems in a society which does not consider honesty as a good policy. The tax authorities had to rely on documents which were prepared by the tax assessess themselves, or else they need to have a huge machinery to do investigative work and then find out that the person is not showing the right numbers. It is there loop holes in the existing law which led to the bad situation of "black money" in India. Every one wanted short cuts, and traders wanted to make more money even if it meant bypassing existing laws.

This one single move of banning currency is not going to be the "be all and end all" for black money. It would slowly start coming in, unless we move more and more into cash less transactions. But what this move has done is to do a "hard reset" on every one. BTW, Chanakya's Arthashastra stipulates very high punishments for Traders who violate laws (and get caught). It seems his belief was that the very nature of the work allows them leeway to cheat, and hence the only detterance would be to make an example of them who get caught.

[rdhawan15]

Originally Posted by blacksport

When the dust has settled we'd know whether we really gained anything.

Agreed, and this remains to be seen over the next 6 months.

So, the problem of black money is thought to be resolvable through Demonetization as per the BJP Government. I, for one, feel that their thought process should be given a chance.

The second school of thought focuses on boosting consumption as a way to tax the consumption and indirectly levy taxes on black money. The downside with second alternative is that the salaried guys pay direct taxes and their consumption is taxed again whereas the black money hoarders only pay for the consumption. So, it is a win-win for business class while salaried and professional people have always been aggrieved.

In any case, the Government needs to rationalize its tax structure so that business men participate in tax system of the country. Without a corresponding modification in the tax regime, it is a matter of time before cash finds place its original place in the lockers. This all could change if the Government goes for a dynamic taxation regime that focuses on leaving more in the hands of people so that they can confidently participate in economic activity.

I have seen financial experts mention that tax rates in India are low and they compare it directly against the Federal tax regime in the US. They forget that the US Government does much more for their citizens than the Indian Government could even plan for including the medical and educational support they offer. So, if people need to be induced to pay taxes voluntarily the Government has an equal responsibility to stand in line for the citizen.

[diyguy]

Quick question, if I fund my credit card to positive credit and withdraw using that, will I be charged any interest or fee?

[hemanth.anand]

Originally Posted by diyguy

Quick question, if I fund my credit card to positive credit and withdraw using that, will I be charged any interest or fee?

even credit card withdrawal is limited to 2500 per day. I got this message today morning from SBI. Also you cannot deposit more cash than your unbilled amount or due amount in your card statement. these two rules are till dec30

[diyguy]

Originally Posted by hemanth.anand

Also you cannot deposit more cash than your unbilled amount or due amount in your card statement. these two rules are till dec30

Is there a fee for withdrawal and an interest component that I will have to bear? My transactions are only white and I am salaried. I however have my credit cards linked to my account and if I move my excess savings account funds to my credit cards, which will be in positive and not negative, can I withdraw upto 2000 or 2500 as per the limit without incurring any interest? I am not going to deposit cash into the credit card but am going to do an online transfer into the credit card or rather pay excess into it. This will allow me to have more cards that I can use at the atm in my office which has no takers at all.

[Thad E Ginathom]

Is it an actual idea to tax payments to banks accounts?

I can't think of a better way of encouraging cash-no-receipt transactions. And the growth of the black economy. It's just the other side of you can have a receipt but you'll have to pay the tax.

[download2live]

I am in awe of the Indian PM to have taken such a bold decision. The effects are there to see. There is peace in Kashmir Valley. No more stone pelting.

What has me worried is that Rs 500 and Rs 2000 notes are still there. In my opinion high value currency notes should be banished. In Australia they were wondering where are all the 100 dollars bill. Indeed while you can see the 50 dollar note quite frequently 100 dollar bills are rare. After investigations they found that almost all of 100 dollars bills are hoarded by Drug dealers and other anti social elements to keep their transactions out of regular banking system and hence hidden from government.

Maybe the reason Modi kept the 500 and 2000 notes is that cards are still not a common thing among Indians. Specially the rural folks. Once the Adhar scheme is done and every Indian has an account with an associated card, then 500 and 2000 notes will also be done away for good. Just a guess.

[avira_tk]

Originally Posted by sachinpk

Why would that be? If they make lot more money than white collar workers, then they have to pay lot more tax! Is the white collar worker given any luxury to avoid tax? The socialist mentality in Kerala; that a construction worker is a poor honest man, while a white collar worker is a rich boorshwa has to get changed. If they play outside the banking system (even when claiming 100% literate), then their reasons could be some thing else.

I am not an uber-rich, ultra savvy person with lots of cash who has disdain for the poor. It also pains me when I see that me being an honest tax payer for 15+ years, finds it tough to buy a decent plot of land in KL. All this when supposedly "poorer people", goes for an odd-job in the Middle east, pumps money through the hawala route and has ready cash to make all property deals. And when land registration is done at ridiculous prices and huge amounts go into the pockets of very many "poor people" like Class A gazetted officers, a brigade of clerks and politicians. This black money now hoarded by all these "poor people" have to now come out in the open.

.

That would be because they have seasonal income and aren't part of the mainstream economy. You were all for targeting car owners for out of state registration , basically because they had posher apartments than you did. You were calling them bourgeois without a care and suddenly you find that attitude suffocating.

You don't have to be uber rich and ultra savvy to despise the poor, a sense of entitlement will make the cut.Nothing prevents you from going to the middle east and getting enough money to buy a plot, when did paying income tax entitle anyone to a plot of land? 15 years is hardly enough time to pay up a single housing loan and you're whining about not being able to buy land. There is plenty of land available for sale in Kerala and prices are at an all time low, what's stopping you if everything is accounted. The sellers will ask you to deposit the money in the cooperative banks though.