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Old 12th November 2016, 13:32   #511
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by Sawyer View Post
The media, by misinforming, has done everyone a disservice here. There was zero need for shops and traders, that are honest in their income tax, to stop accepting these notes till a couple of days before the end of the year. It would have stopped some of the madness and even perhaps even some deaths in the lines at the banks.
And now you are doing a disservice by misinforming the public.

1) PM was very clear in his speech. The old 500/1000 ceases as legal tender on 8th Nov for all transaction, except for certain exceptions like hospitals/train-air tickets/fuel-bunks until 11th Nov. I hear they extended the exception by 3 more days.

2) The deadline to surrender the old 500/1000 until Dec 2016 is to make sure people don't rush to the bank all at once. The 50 odd days are available to surrender cash from transactions prior to the banning. These 50 days are not for transacting with old currency.

3) If businesses continue to accept old currency, it defeats the very purpose of this move. The black currency hoarders will go on a spending binge buying everything in sight. This is why using old currency is illegal.

4) Businesses that continue to accept old cash will face the music when they try to surrender the cash to the banks. They will obviously cross the 2.5L limits (not sure businesses have different limit), so they will have to pay penalty. They will also be asked to show source of so much old cash. If the invoices they show belong to dates after the ban, they can be charged for accepting banned currency even after the deadline.

Last edited by Samurai : 12th November 2016 at 13:35.
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Old 12th November 2016, 13:43   #512
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

This is exactly what I've been saying for the last couple of days. There's just general panic and somewhere that compromises people's voice of logic. And, TBH, many vendors here are accepting old notes. The mandate is extremely clear on this. The old notes can be deposited till Dec 30 with no limit on any account. As long as this cash is accounted for while filing returns, it doesn't matter if it was received after Nov 8.

This step though has done something for me that I couldn't get done for the last two years. There were many contract debtors who owed me money. Within the last two days they've come themselves (!) to pay back the owed money. It has run into a substantial sum and I'm really quite happy. I'd filed these away as permanent bad "loans".

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There was zero need for shops and traders, that are honest in their income tax, to stop accepting these notes till a couple of days before the end of the year.

Basically they are saying that I have the confidence of still getting value for these notes by depositing them till end of December, and I am honest in my taxes, so why should I let my business and customer service suffer avoidable disruption when it is not necessary for this to happen?
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Old 12th November 2016, 13:57   #513
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by Samurai View Post
4) Businesses that continue to accept old cash will face the music when they try to surrender the cash to the banks. They will obviously cross the 2.5L limits (not sure businesses have different limit), so they will have to pay penalty. They will also be asked to show source of so much old cash. If the invoices they show belong to dates after the ban, they can be charged for accepting banned currency even after the deadline.
Penalty under which law, other than the Income tax act, and that only if income corresponding to the deposits has not been disclosed as such in the return of the appropriate assessment year? Charged for accepting banned currency - that word ban again, there is no ban, there is only a withdrawal of legal tender status - under which law?
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Old 12th November 2016, 13:58   #514
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by Samurai View Post
And now you are doing a disservice by misinforming the public.

3) If businesses continue to accept old currency, it defeats the very purpose of this move. The black currency hoarders will go on a spending binge buying everything in sight. This is why using old currency is illegal.
Well said Samurai.

I tried to make this limited point at my level best that it's clearly illegal. Then the argument came that if two individual agrees they can very well transact in a currency which is clearly declared as not legal by the issuing authority.

I left at that point, because it was beyond my capacity to drive the point to people who are very well informed and believe that it's perfectly legal to transact in a currency which the State/RBI declared not legal.
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Old 12th November 2016, 14:14   #515
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

Unbelievably long lines at banks and post offices continue today, it's crazy. Most banks are also not prepared for this kind of footfall so it's chaotic. One SBI branch had a separate line for senior citizens and the branch manager himself was handling the queue. At most places they have a single line for both exchanges of old notes as well as account deposits.
Never before were people so desperate to get notes worth Rs.4000 exchanged! And the most popular denomination is 100

Last edited by NPV : 12th November 2016 at 14:16.
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Old 12th November 2016, 14:17   #516
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I am started to get a feeling that the very very powerful lobby of Black Money holders can't take this lying down and can activate their channels in Media, Bureaucracy, Politics, etc by telling them to create panic by doing their part in blocking the smooth transition. Really testing times for the whole nation.
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Old 12th November 2016, 14:19   #517
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My wife just came back after depositing her cash on hand and then had a pang of regret, because there is no legal tender money of any kind in her bank to withdraw - she was told to come in the evening for that.

Why regret? Because she did this after a visit to a chemist who sold her medicine with a bill of today's date against a Rs 1000 note AND gave back change, and a visit to her vegetable vendor who told her that at this time he was selling against these notes for at least another 20 days. I suppose people just want to be cautious about the Dec 31st deadline, and not also want to stand in the inevitable long lines for deposit that will arise a day or so before that date.
PS: The vendor, in crisp vernacular, said - after all, business cannot stop madam...
PPS: Just read this by Modi in Japan:
Addressing the Indian diaspora in Japan, PM Modi said he was aware of the difficulty people were facing back home after the scrapping Rs. 500 and Rs. 1,000 notes, but emphasised that it was necessary in the larger interests of the nation. "I salute each and every Indian. Many families had weddings, health problems...yes they faced inconvenience but they accepted the decision," he said.
Did the common people have any choice about accepting the decision for a situation, where inconvenience for some included dying in lines at banks?

I think I may not have been entirely fair to the media. A reported statement of the Finance Minister and the Revenue Secretary:
Quote
He said however that those depositing large amounts of unaccounted money will have to face the consequences under tax laws, which provide for tax and a 200 per cent penalty.
He added that deposits within the tax exempted limit can always be made within the banking system without any questions being asked.
Revenue Secretary Hasmukh Adhia said yesterday that only cash deposits of over Rs. 2.5 lakh in bank accounts will be scrutinised by the tax department and in case of mismatch with I-T returns, tax plus 200 per cent penalty would be levied.
Unquote

Note that all references of penalties and actions are those that will be taken by the income tax department, not under any law for accepting "banned" money.

Last edited by SDP : 12th November 2016 at 16:24. Reason: Merging back to back posts
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Old 12th November 2016, 14:52   #518
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by ach1lles View Post
There were many contract debtors who owed me money. Within the last two days they've come themselves (!) to pay back the owed money. It has run into a substantial sum and I'm really quite happy. I'd filed these away as permanent bad "loans".
I hope for your sake that the total amount is less the 2.5L. If not, they just transferred their monkey onto to your back. You will have to pay the tax and penalty on their behalf, while their slate is clean.

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Originally Posted by Sawyer View Post
Penalty under which law, other than the Income tax act, and that only if income corresponding to the deposits has not been disclosed as such in the return of the appropriate assessment year? Charged for accepting banned currency - that word ban again, there is no ban, there is only a withdrawal of legal tender status - under which law?
I hope you know the difference between statutory vs regulatory power. Statutory powers are spelled out by law that are passed by the legislative body. But regulatory rules are made by a government agency within that law. Law is usually broad and gives enough discretion to the government. That is why none of the PILs against this are working. The government has the power to make this regulatory ruling.

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Originally Posted by Sree73 View Post
I left at that point, because it was beyond my capacity to drive the point to people who are very well informed and believe that it's perfectly legal to transact in a currency which the State/RBI declared not legal.
Currency is not an easy concept to understand. When rare events like this occur, resulting confusion is understandable.
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Old 12th November 2016, 14:55   #519
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by Samurai View Post
I hope you know the difference between statutory vs regulatory power. Statutory powers are spelled out by law that are passed by the legislative body. But regulatory rules are made by a government agency within that law. Law is usually broad and gives enough discretion to the government. That is why none of the PILs against this are working. The government has the power to make this regulatory ruling.
I have known this for over forty years now. I am also fully aware of the kind of ruling the government has and has not made in this case. And the confusion over currency is all too visible:-)

Last edited by Sawyer : 12th November 2016 at 14:57.
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Old 12th November 2016, 17:27   #520
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

Had been to HDFC bank today to exchange/deposit/withdraw money. Deposited Rs. 12,000 (10,000 of this was actually from our house maid) and then withdrew Rs 10,000 (got two bundles of Rs 50x100). Have another Rs 4,000 with me to exchange at a later date. Also planning to keep one Rs 1,000 note as collectible!

They were checking if one had withdrawn money previous day to ensure one doesn't exceed their weekly quota.

Although the banks are doing their best, pain points are clearly visible. Not everyone is amused.
1. There were only two counters as opposed to 3 regular counters which were numbered above - one for exchange and other for deposits/withdrawals.
2. One person came with a gunny bag containing Rs 90 Lakhs , and it took more than an hour for bank staff to count the money. All the people standing behind trying to deposit/withdraw smaller amounts were made to wait unnecessarily. Apparently some other banks have been sending messages to their customers to ask for separate time slots if they are bringing in large amounts but clearly HDFC bank doesn't think along those lines. One of the agitated customers even called Nodal officer to complain. It's surprising that one of the largest private sector bank doesn't have clear guidelines on how to handle this.

Also there were clear announcements pasted near the counter which said that Rs 4,000 exchange is one time per person till Nov 30. Although it was interesting to note that FM Jaitley wasn't entirely aware of this rule when he addressed press today at 3 PM.

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Originally Posted by Samurai View Post
And now you are doing a disservice by misinforming the public.
3) If businesses continue to accept old currency, it defeats the very purpose of this move. The black currency hoarders will go on a spending binge buying everything in sight. This is why using old currency is illegal.
This was the point i was trying to drive home, but obviously some people here think there is nothing wrong in this.

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Originally Posted by Sawyer View Post
I have known this for over forty years now. I am also fully aware of the kind of ruling the government has and has not made in this case. And the confusion over currency is all too visible:-)
On a lighter note, your handle should be lawyer instead of sawyer, because you argue like one!

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Originally Posted by Sherlocked View Post
My friend told me that someone he knows just purchased a flat using his 500/1000 notes.
He said it was a win-win situation for both the buyer and the builder as the builder too was having difficulty selling those flats in that particular locality.

Make hay while the sun shines, eh?

Surely, the builder must have made prior arrangements on how to deal with the old notes.
I know of some one who sold a car in second hand market and received cash in old notes amounting to approx 5 lakhs.

Last edited by SilentEngine : 12th November 2016 at 17:44.
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Old 12th November 2016, 17:29   #521
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I have no idea how far the attached is true, but it is easy to imagine it happening.
http://www.ndtv.com/mumbai-news/baby...-lateststories

And even if the hospital was not of the type that was required for some time to accept the notes, nothing stopped it from voluntarily doing so if it was honest with its income tax liability.

I am sure there will many such events in the country, particularly in semi urban and rural India.

Modi has taken a big gamble here; if all the allied steps needed to address the entire black money issue do not now get taken and the story of 1978 repeats itself, there will be a very violent electoral backlash from the usually silent India. And it will be well deserved, in that case.
PS: and to another comment, yes, I am a tax lawyer that got bored with its practice!

Last edited by Sawyer : 12th November 2016 at 17:49. Reason: PS
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Old 12th November 2016, 17:50   #522
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Although One person came with a gunny bag containing Rs 90 Lakhs , and it took more than an hour for bank staff to count the money. All the people standing behind trying to deposit/withdraw smaller amounts were made to wait unnecessarily.
Have some pity on him. He will lose 75.75L out of that 90L in taxes and penalties. Without declaring he would have lost the whole 90L.
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Old 12th November 2016, 18:09   #523
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Have some pity on him. He will lose 75.75L out of that 90L in taxes and penalties. Without declaring he would have lost the whole 90L.
He may not. If can genuinely prove that it's not black money, he end up paying the 30% tax.
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Old 12th November 2016, 18:10   #524
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Default Re: Government scraps Rs 500 and Rs 1000 notes!

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Have some pity on him. He will lose 75.75L out of that 90L in taxes and penalties. Without declaring he would have lost the whole 90L.
Let assume that person to be a farmer. In that case, I guess it would be legitimate income. Any opinions?
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Old 12th November 2016, 18:20   #525
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He may not. If can genuinely prove that it's not black money, he end up paying the 30% tax.
Yup, that's possible. But somebody coming with 90L during this time, it is unlikely to be white.

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Let assume that person to be a farmer. In that case, I guess it would be legitimate income. Any opinions?
Even farmers have to show proof it came from sales of agriculture goods. They can't just claim.
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