[akshay380]

Originally Posted by extreme_torque

My dad's an officer with one of the biggest PSU bank and even since the ban came into effect, not one person has deposited more than 2.5 lakhs yet. I am not sure how effective this is going to be and I am also of the opinion that the big fish got a smell of it much before mere mortals did.

Or may be they are still trying to figure out what else can be done since deadline is until Dec end? Few such people I know have been waiting in the wings but they are truly shaken.

[condor]

Originally Posted by extreme_torque

.. , not one person has deposited more than 2.5 lakhs yet. .

This should happen after the initial rush dies down. Some people may have mistaken it for 2.5L in one go ..

Btw, if there was any leak anywhere, it would have come out in the open. Not likely is my take ..

[binand]

Originally Posted by karuvally

With the ban on the notes and new laws to keep black money in check, I can't help but wonder if the luxury car segment in India is going to take a dip. Surely, 100% percent of the cars sold in India are not bought with money from legit sources :-) Can someone more knowledgeable shed some light on this?

Starting June 1, 2016 all automobile sales in India above 10L - first sales, organized secondary market, ad-hoc second-hand sales - have to include a 1% TCS (Tax Collected at Source). That is, the seller needs to charge 1% over the sale amount (Rs. 20K on a 20L sale) and credit that to the government along with the PAN of the buyer. The buyer can then offset this amount in their tax due.

This thread has details: https://www.team-bhp.com/forum/india...-1-2016-a.html (1% TCS on vehicles above Rs. 10 lakh from June 1, 2016)

[ach1lles]

Here's a simple way to understand this. When you buy something from anyone, your means of exchange of value doesn't matter. For the seller equivalent value can be found in (legal tender) money, or in anything which the seller deems as appropriate exchange for whatever they are selling to you. It doesn't even have to be physical. Rare coins, stamps, comic books, an old photograph, you washing his car etc. That value has to be acceptable to the seller, not the government.

Here if the seller can deposit the OHD invalid tender notes and get that money in his account before Dec 30, these notes hold value for the seller wether the Govt. understands this value exchange or not.

Originally Posted by Sawyer

I know, it is becoming clear to me that nothing will clear the confusion among the easily confused, because clear thinking does not seem to be common.

One last attempt:
Quoting the same para 2:
"The legal tender character of the existing bank notes in denominations of ₹500 and ₹1000 issued by the Reserve bank of India till November 8, 2016 (hereinafter referred to as Specified Bank Notes) stands withdrawn. In consequence thereof these Bank Notes cannot be used for transacting business and/or store of value for future usage. The Specified Bank 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 of commercial banks/ Regional Rural Banks/ Co-operative banks or at any Head Post Office or Sub-Post Office."

Note by the way that this is just an FAQ, so it doesn't have the power of laws and rules made under the law. Nonetheless, it is an accurate answer in what is a guidance note.

Please appreciate the grammatical distinction between "CANNOT" and "MUST NOT". Cannot is used here, because the other party to the transaction would be legally entitled to refuse to accept them anymore, so you cannot use them in the manner you could before their legal tender character was withdrawn.

If the notes were banned, as is the common confusion surrounding this not so complex issue, the words in the FAQ would need to be " these Bank Notes "must not" be used for...." But to the best of my knowledge, there is no law on the Indian statute books that would permit the use of "must", indicative of a ban on the use of the note. The consequences of continued use are commercial and not penal. The penalties referred to are existing ones in the Income tax Act on undeclared income and can only be levied if the use/deposit of these notes is detected, and the possession of the notes cannot be proved to arise from income legally tax free, or income declared in an income tax return.

I haven't studied the subject of counterfeit money in India in detail, but it may well be like it is in the US: the use of counterfeit money is illegal in the US, IF the use is with an intent to defraud the receiver. And obviously it is not legal tender, so any one can legally refuse to accept it. But if they choose to do so, knowing that it is counterfeit, no ground for prosecution arises. There is no ban on counterfeit money in absolute terms in the US; it isn't treated like pornography may be in some states where it is banned in absolute terms.

[pedrolourenco]

Originally Posted by SDP

Did you face same problem at any other places as well?
Did they actually swiped the card and it gave error/declined? Or did they just tell you that the card-machines are not working?

No. There was a problem with cards in another shop too. I tried both my cards thrice.

Might as well be a clever ploy by the supermarket to replenish their dwindling change.

Not possible as they took a Rs.2000 note from and returned 10 Rs.100 and 1 Rs.50 notes to me.

[lHarpreetl]

Originally Posted by pedrolourenco

No. There was a problem with cards in another shop too. I tried both my cards thrice.

Yes it seems there was some issue with card transactions yesterday evening. Multiple shops including Dmart, local shops were not able to accept card transactions as it was showing some error. Its working now it seems I just went out to buy some groceries.

[earthian]

The demonetisation of Rs 1000 & Rs 500 notes would have impacted the black money currently in circulation. But that is only a fraction of the entire black wealth, created over decades, and a sizeable portion of the black money every year has been systematically converted into assets and stashed either here in India or abroad. The most convenient parking places are property (including land), precious metals and stones, businesses including agriculture, trusts, foreign currency ( and deposited in accommodating banks abroad), stock markets and a host of smaller havens. (Let me know if i have missed any).

The demonetisation is likely to effect:

1) Tax: Having closed the voluntary disclosure window for undisclosed money, it has been reported that government will keep a close watch on deposits over Rs 2.5 lakh in cash. This would mean increased tax net, higher tax collection and a better tax to GDP ratio.

2) Interest rates: Apart from lower inflation, the bigger impact on interest rates will be the liquidity with which banks will be flushed. Higher deposit growth and continuing weak credit growth would create opportunities for lending rate cuts and investment activities to pick-up.

3) Liquidity: Movement of goods and money will be hit in the short. Due to overall tightening of the cash-liquidity in the supply chain, consumer firms may be forced to offer easier credit terms to the distributors in the near term.

4) GST: Demonetisation comes at an important time as the country heads to a new tax regime with the implementation of GST. Demonetisation would increase the tax net and along with GST result in reduction of black money generation.

5) Financial assets: As money lying idle comes in the main economy it would move to higher yielding and liquid assets. Money is likely to move to financial assets from gold, precious metals, real estate and plain cash.

Having taken the cudgels against black money, the Government has to continue with the crusade so that sustainable, tangible and quantity benefits accrue. It is a one way street now as else the opposition may cry itself hoarse that it was only aimed at the ensuing elections, and the common man, who was initially happy at seeing the "haves" sh**ing bricks and sweating, would now be doubtful of the entire scenario, especially after suffering in the initial days and falling prey to the anti-crusade propaganda of the aggrieved. Since the BJP cannot afford to lose the trust of the electorate, it is expected that the crusade would continue.

So what next?

Some of the moves that could be seen are reintroduction of wealth tax filing, option to convert surplus gold into gold bonds ( as a sop before cracking down), declaration of property owned directly or indirectly, crackdown on P-notes, and what else?

sources: Economic Times; Wikipedia ; dnaindia

[KD007]

Originally Posted by SDP

Did you face same problem at any other places as well?
Did they actually swiped the card and it gave error/declined? Or did they just tell you that the card-machines are not working?


Might as well be a clever ploy by the supermarket to replenish their dwindling change.

Yeah two places. Super market they just told it's not working. In subway they did try. Two customers were then given change for old currency and for a third customer at subway the machine worked. Looked like a genuine issue.

[rishee]

Originally Posted by pedrolourenco

Credit card swiping machines not working is most establishments since yesterday evening. Did my shopping at the local supermarket and was forced to pay cash for which I had to stand 2 hours in a line to get. What's the situation with credit cards in other places?

Originally Posted by SDP

Did you face same problem at any other places as well?
Did they actually swiped the card and it gave error/declined? Or did they just tell you that the card-machines are not working?


Might as well be a clever ploy by the supermarket to replenish their dwindling change.

I went to a local supermarket and he refused to accept credit card saying he has to pay 6% VAT. Leave it to your wise judgement about the intention.

[Samurai]

Yesterday evening cards were not working anywhere. The restaurant I visited for takeaway was almost crying, saying he is losing business because both old big notes and credit card are not working. They usually accept credit card.

Originally Posted by extreme_torque

I am not sure how effective this is going to be and I am also of the opinion that the big fish got a smell of it much before mere mortals did.

People who have large amount of unaccounted money risk investigation. So they might decide not to surrender the cash. That means the government gets it 100%. So it still works.

Originally Posted by ach1lles

Here's a simple way to understand this. When you buy something from anyone, your means of exchange of value doesn't matter. For the seller equivalent value can be found in (legal tender) money, or in anything which the seller deems as appropriate exchange for whatever they are selling to you. It doesn't even have to be physical. Rare coins, stamps, comic books, an old photograph, you washing his car etc. That value has to be acceptable to the seller, not the government.

What about sales tax? If a transaction doesn't involve cash, how is government going accept it? This becomes important in RE sales, where the amount has to be mentioned.

[Simhi]

Originally Posted by earthian

So what next?

Some of the moves that could be seen are reintroduction of wealth tax filing, option to convert surplus gold into gold bonds ( as a sop before cracking down), declaration of property owned directly or indirectly, crackdown on P-notes, and what else?

In my opinion, government should try to move towards cashless economy. In this regard, government should announce a limit on cash transactions which are legal. For example, any cash transaction above Rs. 25000 should be declared illegal. Also, holding of cash beyond certain limit say Rs. 50000 should be illegal. This will force all, including small traders, to ask others to do transaction using plastic money. This will also reduce number of transactions in current accounts. This should be done in time bound manner (6 to 9 months but within 1 year). Certain steps can be taken immediately by removing cash on delivery (COD) options from e-commerce sites.

[Turbanator]

government should try to move towards cashless economy

Agree, perhaps no cash acceptance beyond 50,000. If someone has excess cash due to any reasons like multiple lower denominations sales, collections etc, it should be first deposited into Bank and then cheque or RTGS are done. If possible some kind of certified cheques should be issued based on limits or creditworthiness or even blocking that amount in the account which should be accepted by everyone like card payment. Existing cheque bounce laws takes too much time and efforts and most people won't accept cheques from unknowns. As of now, even Government does not accept cheques - try any customs duty payment. Also Aadhaar based credit cards can be issued with limited credit limits which can be increased depending on payment/spends

[Sree73]

Originally Posted by ach1lles

Here's a simple way to understand this. When you buy something from anyone, your means of exchange of value doesn't matter. For the seller equivalent value can be found in (legal tender) money, or in anything which the seller deems as appropriate exchange for whatever they are selling to you. It doesn't even have to be physical. Rare coins, stamps, comic books, an old photograph, you washing his car etc. That value has to be acceptable to the seller, not the government.

Here if the seller can deposit the OHD invalid tender notes and get that money in his account before Dec 30, these notes hold value for the seller wether the Govt. understands this value exchange or not.

Exchange items should be the items which are allowed within the legal system.

Can some one exchange Ganja / Heroin / Hashish etc. in exchange of some thing they bought from some one?

Accordingly, the old 500/1000 currency is made 'not legal tender'. This one is removed because it was found that it is being stashed as black money and finding way into terrorist activities and other dreadful area. The old currency can be used only in exempted service area for a few days and not to be transacted other than depositing in the bank.

Dec 30 deadline is an extended window to facilitate the withdrawal of currency without much inconvenience.
Any transaction in the old currency after the deadline of Nov 8 is deemed illegal. (Except the few area in which an exemption is given till 14th Nov)

[binand]

Originally Posted by Samurai

What about sales tax? If a transaction doesn't involve cash, how is government going accept it? This becomes important in RE sales, where the amount has to be mentioned.

Taxation of such transactions is on FMV basis. All TDS provisions are applicable.

[earthian]

Originally Posted by Turbanator

Also Aadhaar based credit cards can be issued with limited credit limits which can be increased depending on payment/spends

Was just talking to a senior bureaucrat. He said that the next move is to link up all purchases, beyond a certain limit, with Aadhaar. Cash subsidies will also be linked with Aadhaar. Today some of them like LPG gas are linked, but going forward, electricity subsidies, fertiliser, and such could also get covered. There are some issues where the subject is concurrent such as the Power sector for example.