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Government planning to levy penalty for old currency holders post December 30

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As per fresh reports from PTI, Government is planning to penalize holders of old currency notes post December 30. As per the notification from RBI and declaration of old currency recall from Government, a period of 50 days was granted to deposit such scrapped notes into bank accounts. RBI has additionally allowed depositing of such old notes at selective branches post this period up to March 31st, 2017.

As per the reports, government is planning to levy penalty of ₹50,000 at minimum for holders of more than 10 currency notes of such scrapped notes. While government is yet to officially confirm the same, reports are already around social sites and news sites hinting that government may reduce the March 31st, 2017 deadline of depositing such scrapped notes with RBI branches.

Currently, holders of such currency have time till December 30 to deposit the same in their bank accounts. For anything involving cash from undeclared sources of income under tax returns, 50% tax is levied and 25% is deposited as FD earning no interest locked up for 4 years.

Back in 1978 when Janata Party Government had recalled currency bills of ₹1,000, ₹500 and ₹10,000, it had passed similar ordinance. With that ordinance, government had eliminated its liability post recall period.

On the day of recall of currency notes, there were ₹15.44 lakh crore worth of 500 and 1000 denominated notes in circulation. Out of which it was expected that a significant portion will not return back to banks on account of estimates of black money being parked heavily in cash. However, as per Government’s own admission nearly 90% has already returned back to banks. On account of such huge withdrawal of currency which accounted for almost 84% of total currency in circulation at the time of recall, market is affected by cash crunch. RBI had to issue more of ₹2,000 currency notes to release more cash in market which sucked up low denomination currency due to shortage of ₹500 currency notes. Now after significant portion of cash demand on account of demonetisation has been met with new notes of 2000, currency printing mints are printing more of 500 denominations. However, for normalcy it is expected that it will take least first quarter of FY 2016-17. Also, for delimiting of currency withdrawals from bank accounts post December 30, there is little scope for government to withstand on its promise. With less than a week left, still banks aren’t available to pay ₹24,000 per customer per week as per the declared limits of withdrawals from saving bank accounts.

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Tags : Penalty on old currencyPenalty on scrapped currency Notes
Raj Kumar

The author Raj Kumar

I love blogging and studying taxation. I write articles related to Tax laws and common issues in handling taxation in India. Often, common but small mistakes make things complicated. I write and share them to save precious time of others.

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