(A Imandaari ka Utsav, A Pramanikta ka Parv and A Mahayagna)
PM Narendra Modi on 8th November. 2016 (Tuesday) announced scrapping of Rs 500 and Rs 1,000 notes. The surprise move triggered panic reactions. News is viral on social media. As a Tax consultant I am receiving call regarding it. Necessary corrective actions already have been taken and hence there is no reason for bank customers to panic.
This step will strengthen the hands in the fight against corruption, black money and fake currency. To minimize the difficulties of citizens in the coming days, several steps are being taken:
1.Persons holding old notes of five hundred or one thousand rupees can deposit these notes in their bank or post office accounts from 10th November till close of banking hours on 30th December 2016 without any limit.
2. Thus you will have 50 days to deposit your notes and there is no need for panic.
3. Your money will remain yours. You need have no worry on this point.
4. After depositing your money in your account, you can draw it when you need it.
5. Keeping in mind the supply of new notes, in the first few days, there will be a limit of ten thousand rupees per day and twenty thousand rupees per week. This limit will be increased in the coming days.
6. Apart from depositing your notes in your bank account, another facility will also be there.
7. For your immediate needs, you can go to any bank, head post office or sub post office, show your identity proof like Aadhaar card, voter card, ration card, passport, PAN card or other approved proofs, and exchange your old five hundred or thousand rupee notes for new notes.
8. From 10th November till 24th November the limit for such exchange will be four thousand rupees. From 25th November till 30th December, the limit will be increased.
9. There may be some who, for some reason, are not able to deposit their old five hundred or thousand rupee notes by 30th December 2016.
10. They can go to specified offices of the Reserve Bank of India up to 31st March 2017 and deposit the notes after submitting a declaration form.
11. On 9th November and in some places on 10th November also, ATMs will not work. In the first few days, there will be a limit of two thousand rupees per day per card.
12. This will be raised to four thousand rupees later.
13. Five hundred and thousand rupee notes will not be legal tender from midnight. However for humanitarian reasons, to reduce hardship to citizens, some special arrangements have been made for the first 72 hours, that is till midnight on 11th November.
14. During this period, government hospitals will continue to accept five hundred and thousand rupee notes for payment.
15. This is for the benefit of those families whose members may be unwell.
16. Pharmacies in government hospitals will also accept these notes for buying medicines with doctors' prescription.
17. For 72 hours, till midnight on 11th November, railway ticket booking counters, ticket counters of government buses and airline ticket counters at airports will accept the old notes for purchase of tickets. This is for the benefit of those who may be travelling at this time.
18. For 72 hours, five hundred and thousand rupee notes will be accepted also at Petrol, diesel and CNG gas stations authorized by public sector oil companies, Consumer co-operative stores authorized by State or Central Government, Milk booths authorized by State governments, Crematoria and burial grounds.
These outlets will have to keep proper records of stock and collections.
19. Arrangements will be made at international airports for arriving and departing passengers who have five hundred or thousand rupee notes of not more than five thousand rupees, to exchange them for new notes or other legal tender.
20. Foreign tourists will be able to exchange foreign currency or old notes of not more than Rs 5000 into legal tender.
21. One more thing I would like to mention, I want to stress that in this entire exercise, there is no restriction of any kind on non-cash payments by cheques, demand drafts, debit or credit cards and electronic fund transfer.
In his speech P.M. Modi told that, In spite of all these efforts there may be temporary hardships to be faced by honest citizens. Experience tells us that ordinary citizens are always ready to make sacrifices and face difficulties for the benefit of the nation. So, in this fight against corruption, black money, fake notes and terrorism, in this movement for purifying our country, will our people not put up with difficulties for some days? I have full confidence that every citizen will stand up and participate in this 'Mahayagna'. My dear countrymen, after the festivity of Diwali, now join the nation and extend your hand in this Imandaari ka Utsav, this Pramanikta ka Parv, this celebration of integrity, this festival of credibility. Secrecy was essential for this action. It is only now, as I speak to you, that various agencies like banks, post offices, railways, hospitals and others are being informed. The Reserve Bank, banks and post offices have to make many arrangements at very short notice. Obviously, time will be needed. Therefore all banks will be closed to the public on 9th November. This may cause some hardship to you. I have full faith that banks and post offices will successfully carry out this great task of national importance. However, I appeal to all of you to help the banks and post offices to meet this challenge with poise and determination. My dear citizens, From time to time, based on currency needs, the Reserve Bank with the approval of the Central Government brings out new notes of higher value. In 2014, the Reserve Bank sent a recommendation for issue of five thousand and ten thousand rupee notes. After careful consideration, this was not accepted. Now as part of this exercise, RBI's recommendation to issue two thousand rupee notes has been accepted. New notes of five hundred rupees and two thousand rupees, with completely new design will be introduced. Based on past experience, the Reserve Bank will hereafter make arrangements to limit the share of high denomination notes in the total currency in circulation.
As a tax consultant I would like to say every honest citizens Please be careful do not deposit others 500 and 1000 notes in your bank account. It will impact you, this deposit should not more than your cash balance in your books of accounts. Do not panic we have 50 days for it. Use plastic money, mobile wallet, and bank transaction as much as you can. It is always good for your transparent financial transaction, credibility and financial records. Be honest let’s celebrate this Imandaari ka Utsav, this Pramanikta ka Parv and participate in this 'Mahayagna'. Following FAQ will be helpful to understand it better.
Q. Why is this scheme?
Ans. The incidence of fake Indian currency notes in higher denomination has increased. For ordinary persons, the fake notes look similar to genuine notes, even though no security feature has been copied. The fake notes are used for antinational and illegal activities. High denomination notes have been misused by terrorists and for hoarding black money. India remains a cash based economy hence the circulation of Fake Indian Currency Notes continues to be a menace. In order to contain the rising incidence of fake notes and black money, the scheme to withdraw has been introduced.
Q. What is this scheme?
Ans. The legal tender character of the notes in denominations of Rs. 500 and Rs. 1000 stands withdrawn. In consequence thereof withdrawn old high denomination (OHD) notes cannot be used for transacting business and/or store of value for future usage. The OHD notes can be exchanged for value at any of the 19 offices of the Reserve Bank of India or at any of the bank branches or at any Head Post Office or Sub-Post Office.
Q. How much value will I get?
Ans. You will get value for the entire volume of notes tendered at the bank branches / RBI offices.
Q. Can I get all in cash?
Ans. No, You will get upto Rs.4000 per person in cash irrespective of the size of tender and anything over and above that will be receivable by way of credit to bank account.
Q. Why I cannot get the entire amount in cash when I have surrendered everything in cash?
Ans. The Scheme of withdrawal of old high denomination (OHD) notes does not provide for it, given its objectives.
Q. Rs.4000 cash is insufficient for my need. What to do?
Ans. You can use balances in bank accounts to pay for other requirements by cheque or through electronic means of payments such as Internet banking, mobile wallets, IMPS, credit/debit cards etc.
Q. What if I don’t have any bank account?
Ans. You can always open a bank account by approaching a bank branch with necessary documents required for fulfilling the KYC requirements.
Q. What if, if I have only JDY account?
Ans. A JDY account holder can avail the exchange facility subject to the caps and other laid down limits in accord with norms and procedures.
Q. Where can I go to exchange the notes?
Ans. The exchange facility is available at all Issue Offices of RBI and branches of commercial banks/RRBS/UCBs/State Co-op banks or at any Head Post Office or Sub-Post Office.
Q. Need I go to my bank branch only?
Ans. For exchange upto 4000 in cash you may go to any bank branch with valid identity proof.
For exchange over 4000, which will be accorded through credit to Bank account only, you may go to the branch where you have an account or to any other branch of the same bank.
In case you want to go to a branch of any other bank where you are not maintaining an account, you will have to furnish valid identity proof and bank account details required for electronic fund transfer to your account.
Q. Can I go to any branch of my bank?
Ans. Yes you can go to any branch of your bank.
Q. Can I go to any branch of any other bank?
Ans. Yes, you can go to any branch of any other bank. In that case you have to furnish valid identity proof for exchange in cash; both valid identity proof and bank account details will be required for electronic fund transfer in case the amount to be exchanged exceeds Rs.4000.
Q. I have no account but my relative / friend has an account, can I get my notes exchanged into that account?
Ans. Yes, you can do that if the account holder relative/friend etc. gives you permission in writing. While exchanging, you should provide to the bank, evidence of permission given by the account holder and your valid identity proof.
Q. Should I go to bank personally or can I send the notes through my representative?
Ans. Personal visit to the branch is preferable. In case it is not possible for you to visit the branch you may send your representative with an express mandate i.e. a written authorization. The representative should produce authority letter and his / her valid identity proof while tendering the notes.
Q. Can I withdraw from ATM?
Ans. It may take a while for the banks to recalibrate their ATMs. Once the ATMs are functional, you can withdraw from ATMs upto a maximum of Rs.2,000/- per card per day upto 18th November, 2016. The limit will be raised to Rs.4000/- per day per card from 19th November 2016 onwards.
Q. Can I withdraw cash against cheque?
Ans. Yes, you can withdraw cash against withdrawal slip or cheque subject to ceiling of Rs.10,000/- in a day within an overall limit of Rs.20,000/- in a week (including withdrawals from ATMs) for the first fortnight i.e. upto 24th November 2016.
Q. Can I deposit withdrawn notes through ATMs, Cash Deposit Machine or cash Recycler?
Ans. Yes, OHD notes can be deposited in Cash Deposits machines / Cash Recyclers.
Q. Can I make use of electronic (NEFT/RTGS /IMPS/ Internet Banking / Mobile banking etc.) mode?
Ans. You can use NEFT/RTGS/IMPS/Internet Banking/Mobile Banking or any other electronic/ non-cash mode of payment.
Q. How much time do I have to exchange the notes?
Ans. The scheme closes on 30th December 2016. The OHD banknotes can be exchanged at branches of commercial banks, Regional Rural Banks, Urban Cooperative banks, State Cooperative Banks and RBI till 30th December 2016.
For those who are unable to exchange their Old High Denomination Banknotes on or before December 30, 2016, an opportunity will be given to them to do so at specified offices of the RBI, along with necessary documentation as may be specified by the Reserve Bank of India.
Q. I am right now not in India, what should I do?
Ans. If you have OHD banknotes in India, you may authorize in writing enabling another person in India to deposit the notes into your bank account. The person so authorized has to come to the bank branch with the OHD banknotes, the authority letter given by you and a valid identity proof (Valid Identity proof is any of the following: Aadhaar Card, Driving License, Voter ID Card, Pass Port, NREGA Card, PAN Card, Identity Card Issued by Government Department, Public Sector Unit to its Staff)
Q. I am an NRI and hold NRO account; can the exchange value be deposited in my account?
Ans. Yes, you can deposit the OHD banknotes to your NRO account.
Q. I am a foreign tourist, I have these notes. What should I do?
Ans. You can purchase foreign exchange equivalent to Rs.5000 using these OHD notes at airport exchange counters within 72 hours after the notification, provided you present proof of purchasing the OHD notes.
Q. I have emergency needs of cash (hospitalization, travel, lifesaving medicines) then what I should do?
Ans. You can use the OHD notes for paying for your hospitalization charges at government hospitals, for purchasing bus tickets at government bus stands for travel by state government or state PSU buses, train tickets at railway stations, and air tickets at airports, within 72 hours after the notification.
Q. What is proof of identity?
Ans. Valid Identity proof is any of the following: Aadhaar Card, Driving License, Voter ID Card, Pass Port, NREGA Card, PAN Card, Identity Card Issued by Government Department, and Public Sector Unit to its Staff.
Q. Where can I get more information on this scheme?
Ans. Further information is available at our website (www.rbi.org.in) and GoI website (www.rbi.org.in)
Q. If I have a problem, whom should I approach?
Ans. You may approach the control room of RBI by email or on Telephone Nos 022 22602201/022 22602944
The author can also be reached at firstname.lastname@example.org
The Author is a Certified and authorized Tax Return Preparer of Income Tax Department of India; currently he is Managing Director and Founder of ARS Solutions.
Disclaimer - Before making any decisions do consult the experts. Author does not take any responsibility for misrepresentation or interpretation of act or rules. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on.
Tags :Income Tax