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-   -   RBI to withdraw Rs 2,000 notes from circulation; notes will continue as legal tender (https://www.team-bhp.com/forum/shifting-gears/265991-rbi-withdraw-rs-2-000-notes-circulation-notes-will-continue-legal-tender-5.html)

Whenever a business entity does something that seems abnormal at first glance it is likely there is a tax angle to it.

Similarly, whenever a politician does something totally defying rationality it is likely there is an election reason behind it.

The 2016 DeMo was with an eye to dry up funding for the opposition before the then forthcoming all important U.P. State elections of early 2017. The current half-baked DeMo Ver. 2.0 is a last gasp attempt to dry up funding for opposition political parties ahead of the State elections in Rajasthan, Chhattisgarh and Telangana due in late this year.

IMHO the horse manure of unearthing black money is an eye wash for the public and those who wish to believe it.

As per RBI figure 99.3% was returned already. In my honest opinion, this should be read as 100%.

The remaining 0.7% that was not returned, was not because it was black money, but due to individuals inability to exchange it in time. For example I know someone personally who had 10K worth money it in an old suitcase kept somewhere in the corner a big house, which she was unable to find in time.

I can see even with this move rich and resourcefull will have no impact, whatsoever, like last time. They can afford to spend neglegible fractions of money to get it deposited/exchanged as they think fit. They can hire people to stand in queue for them.

Although, I am sure that the poor in remote part of country will again be suffering because of this. Even if you have one note you have to run from pillar to post to get it deposited or exchanged.

The Indian government is dead set on making Indian currency seem like trash. A lot of business is done with Nepal, Bhutan and Sri Lanka, and there are traders and workers there who hold some amounts in 2000 rupee notes. Most will probably figure out how to convert the money, but the psychological effect of a particular currency and its value being undermined constantly is severe. No trader will be happy to hold any amount in rupees, as our capricious national govt may declare any banknote illegal any day with any amount of notice.

Atleast five people who came to my wife's bank branch today for Rs 2000 cash exchange at the counter said in a somewhat angry tone (after being asked to fill up a form & present a valid photo ID)- "But SBI is not asking for all this. We will go to SBI". One even had the audacity to threaten the cash counter staff by saying "I will lodge a complain against you people. SBI does not ask for all this". The people who just had 3-4 notes did not create a ruckus - quietly filled the form and presented their ID cards.

All PSU banks, except SBI, have been instructed to ask customers to fill up a form & present a photo ID card, for note exchange. And to strictly maintain daily log of Rs 2000 notes being deposited/exchanged and by whom.

Makes you wonder what is so special about a PSU bank like SBI or have they been deliberately being told to go easy on Rs 2000 note exchange to facilitate exchanges from you know who!!!

Only a fool would believe that all this drama is for "cleansing" the system of black money.

What Narayan sir said in his post on top of this page regarding the purpose of this exercise is becoming more and more obvious now.

There was an article I read yesterday where it was claimed that the Rs 2000 notes issued earlier were at the end of their "physical" service life and this is one of the reasons why the Rs 2000 notes are being withdrawn. Really? Were these notes so poorly manufactured? If so, how far are we from a similar exercise with "new" notes of Rs 10, 20, 50, 100,200 & 500 denominations citing end of their physical lives. Imagine the chaos if that happens.

The theories, excuses and reasons being given for this exercise are getting more and more absurd with each passing day!!!!

This is one of the most ridiculous excuses given.

Notes of all denominations that are "partly torn / physically worn out" (also termed as "soiled notes") are regularly segregated by the Bank cashier's and remitted to RBI for destruction and replacement with freshly printed notes.

The notes that were stashed away securely by some would probably be in their most fresh condition, as good as newly printed ones.

So take such excuses for what they are worth. :)

I am a CA having my own practice and I can tell you that every one who deposited more than 10 lakh during 2016 demonetization got an IT department notice asking for source of such cash

Most people who deposited large sums showed the source to be Cash Sales. But in subsequent notices IT department asked for details of similar cash sales and deposits during preceding and subsequent periods.

Majority didn't had matching level of cash sales and deposits during preceding or subsequent periods and ended up getting demand notices under section 68 (undisclosed income).

Section 68 has flat 60% tax rate. Including interest and penalties (which is 100 percent of Income tax) demand notices were equal if not more than the cash deposited.

So yeah 99.3% of cash may have returned but it does not mean that those who deposited large sums went scot free.

OK a genuine questions.
1. Who is currently facing issues due to this Rs. 2000 note issue?
2. Who lawfully keeps large amounts of cash at home?
3. And where is one actually spending cash? My in-laws generally keep cash because Punjab still isn't very amenable to UPI, but even then it's small bills. Every large ticket item is bought through online transactions.

So, who is soooo much affected by this? Why this hullabaloo?

Finally, some sense.

We tend to paint a political picture all too soon, wanting to either blame the Centre or State Governments (based on individual political leanings). To all those who are crying that more people will die waiting in queues to get their "hard earned" money converted so that it doesnt vanish in thin air - how many of you are in possession of say 100+ notes of 2000 denomination?

I am genuinely trying to understand cases where people would have tons of 2K denomination notes that they cannot legally get converted. There will be professions in trade - transportation, Grain / Vegetable wholesale etc where I have seen folks needing to carry wads of cash just because of the way that line of business operates, but even those folks - as long as they show it as their legit income - will not have any issues depositing these 2K notes in their current accounts. I really want to understand of cases where legitimate people / businesses will be impacted by this.

FWIW no-where has the RBI claimed that this is for "cleansing" the system of black money. Also, one must consider that black money as untaxed money, is different from unclean, or dirty money (viz attained through violent crimes and other such activities).

Retail payments with the ₹2000 currency have already been stigmatised, despite it being legal tender. This stigma is being cashed in by many sectors (real estate, raw materials and (physical) gold market).

Big businesses neither lost money in the actual Demonetisation back in 2016, nor are they now losing money. They hold positions of power & market monopoly to recoup any loss of efficiency.

This thread seems to be filled with folks who have hundreds of 2000 rupee notes at home.
I have not seen a 2000 rs note for almost a year now and it was common knowledge that the 2000 Rs note was a temporary arrangement to fill the removal of demonetized currencies.

Here is a source saying the same about printing of notes abroad in 1997-98. I was already sure of this. I'm not sure about Pakistani angle of my opinion.

https://m.rediff.com/money/report/pa...g/20100430.htm

Here are a few cases:
1. Anyone in the unorganised sector, 75% of employment in India. They save small amounts of money, convert it into the largest denomination and carry it on them. They can't rock up to the bank and deposit it all there unless they want to lose a day's, or even a week's wages, depending on the employer's whim. The maid takes her pay in cash, not to dodge income tax as so many on this forum repeat ad nauseum, but to make sure her husband doesn't swipe for drinks with the debit card.

2. There is no limit on keeping cash at home, if you can account for it. Deposit insurance is capped at 5 lakhs,if the bank collapses, you're on your own. People don't like being charged for services delivered using their money. There are "reputable" shops that tell you their card machine isn't working and offer discounts on cash payments, not only do those dodging taxes get to keep their money, their expenses are lower. The gold purchases in the last few days involved a premium of 10% versus 30 something for declared income. Inflation beating tax evasion it seems.

3. Any big ticket item is bought with cash, only in urban areas with a high income professional class do you find credit cards readily accepted. White goods, tyres, car accessories and furniture are major cash purchases, in fact, most places only provide only an estimate instead of invoice, 15% discounts usually available for big transactions.

The hullabaloo is not because we have large amounts of cash at home, just venting against propaganda about masterstroke, cleaning up the system, data analytics, receiving a tax notice because the satellites detected a stash buried in a bunker near my farm house using the embedded chip ...I'm unable to keep up.

I hope i am correct but taxman can open assessments upto last 10 years if amount is greater than 50L. Certainly it is designed to avoid litigation with low income earners and catch big fishes.

https://www.livemint.com/Politics/fv...-cases-in.html

I fail to understand why people are even thinking of opposing this well planned, timely pushed and perfectly executed masterstroke.

Those old enough to remember DeMo 1.0 would clearly recall that one of the most advanced and Fort Knox level security features embedded in the newly minted 2k currency notes was the presence of a trackable chip.

So, when the whole automobile world and its uncle are struggling to get enough chips to go in their four wheelers, our benevolent babus have very kindly condescended to release the chips in sufficient numbers by taking them out of those pinkish pieces of paper. Believe me that this is the only explanation worth believing, specially if you are an auto enthusiast.

The Vande Bharat trains have, as per a very reliable source, close to thirty thousand chips. Some of the extricated chips may also end up as donor parts for these masterpieces too.

* * *

In their owners' eagerness to be disassociated with those pink slips, all ICE vehicles are getting their tankful. Shouldn't everyone be happy?

Restaurant bills and supermarket invoices are going up in numbers as well as value. Money enchained in deep and dark crevices of the house are being freed from their fetters. Shouldn't that be celebrated?

Aam Junta is busy devising ways and means to come out of this new tamasha with least losses and damages - fiscal, physical and psychological. They are putting their gray cells to work. Shouldn't intellectual activeness be lauded and aided?

* * *

The current discount rate for exchange of notes in unofficial channels is 30%; it will go up as September nears. Where there is a profit shouldn't there be happiness?

* * *

All said and done, DeMo 2.0 could, at the innocent end, be a simple instance of a seven year itch. On the other extreme, it could also be a ghostly demo of the thoughtlessness of DeMo.
Last year, my father received a demand notice of ₹2,000/- for a return filed and approved (by the department itself) in 2012 :Frustrati.

Sir,

The link you are quoting is of 2017, almost 7 years old. There too, it is mentioned "if search cases reveal...". Search case is what the aam junta knows as Income Tax Raid or Chhapa which takes place on 1 in 10000s of tax evaders (mind you, tax evaders, not tax payers).

Coming to recent times, i.e. Finance Act 2021, only 3 years time period for General Cases (many a times, by the time a modus operandi of tax evasion is unearthed, beneficiaries identified and information passed to jurisdictional AO, the time period already expires). It may look as too much of a time, but practically it isnt.

Further, 50 lacs limit for going beyond 3 yrs in past means that if Mr.X and Mrs.X jointly invested blackmoney worth 1 crores in FY 2019-20 and Income Tax Dept comes to know about it now, nothing can be done about this. No way to bring this blackmoney to taxation.