[jhaji]

My friend pays Rs. 15k per month to his landlady in cash. He wanted to pay by cheque at least this time because of the cash problems. She refused. She is a senior official in I&B ministry. So her saga of unaccounted cash continues. Assuming she lost a lot of cash because of demonetisation, she will make up again and will want to make up. So we will have to keep doing demonetisation again and again to flush out the black money?

It is fairly well-known that cash is only a small percentage of black money. There was a big exposure about secret offshore accounts which goes by the name of Panama Papers (remember?, Amitabh B.'s name was also in this along with lot of other big names). When it came there was big hue and cry and the government made big announcements about instituting inquiry into this. What has happened? Nothing. See this:

http://thewire.in/28655/india-has-no...whistleblower/

There are so many big cases of corruption which are on hold. For example, sample this one involving Adani:

http://thewire.in/58640/black-money-...t-of-vultures/

Then there is the matter of loan write-offs of the fabulously rich by public sector banks worth thousands of crores (despite finance minister's laboured distinctions between a 'waiver' and 'write off'). The latest news came in DNA and Indian Express. So the banks are being refueled through cash from below and a 'sacrifice' is demanded.

Ambani (the company) has recently been fined a huge amount for siphoning off gas from adjacent ONGC source. This has been established after a lot inquires etc. There are already reports that the government is not going to enforce it. Let us wait and see.

There is enough information on the web for those who are equipped to find it. But if one wants to live in a bubble, and is satisfied with slogans, then it can't be helped. Come to think of it the typical TBHP member belongs to a group which is least affected. They are usually quite computer savvy and big users of cashless money, travel in cars (can use old notes on petrol pumps). It is those who are below who face major problems, and to a much smaller extent those that are above (in terms of income and status). But have you seen rich people standing in queues?

[SDP]

Originally Posted by Sawyer

First of all, I have never quoted this example of a white good store anywhere in my posts, so it isn't the kind of thing I have spoken off approvingly on this thread as a civic service, and such a store as a good Samaritan. ...

I am not sure whether you meant it, but it did seemed like you looked at that practice approvingly here ->

http://www.team-bhp.com/forum/shifti...ml#post4093663

Also, would you be kind enough to point me to your post that you mentioned where you have listed the ten odd establishments where this should be OK so that I can work on another example?

[poloman]

Originally Posted by jhaji

Nothing. See this:

http://thewire.in/28655/india-has-no...whistleblower/

There are so many big cases of corruption which are on hold. For example, sample this one involving Adani:

http://thewire.in/58640/black-money-...t-of-vultures/

There is enough information on the web for those who are equipped to find it. But if one wants to live in a bubble, and is satisfied with slogans, then it can't be helped. Come to think of it the typical TBHP member belongs to a group which is least affected. They are usually quite computer savvy and big users of cashless money, travel in cars (can use old notes on petrol pumps). It is those who are below who face major problems, and to a much smaller extent those that are above (in terms of income and status). But have you seen rich people standing in queues?

Please stop quoting websites with out stating their allegiance. All left leaning websites are trying their maximum to spread panic and misinformation. There is a website huffing ton post tracking the number of deaths and is giving atrocious logics for the same like every death in the country is attributed to standing in the queue. Yes the same website which called Trump a clown and vowed to report news related to him in entertainment section. I can post 100 articles in favor of demonetization. But not interested in doing propaganda for or against.
People in TBHP are not living in a bubble. Most of people here are tax paying general public. Did you ask any one standing in the queue whether they are rich or poor? How do you distinguish them? Most of the people in the forum including me have stood in the queue. So let us stop this rich versus poor thamasha.

Originally Posted by SDP

I am not sure whether you meant it, but it did seemed like you looked at that practice approvingly here ->

Frankly even after reading hundreds of post from him, I can't find any cohesive arguments.

[400notout]

Originally Posted by SDP

This is not a individual, but a business. So the 2.5Lakhs limit doesn't really apply in my opinion.

Just wanted to add.

If its a business, it might/should be a current account. The cap (current scenario) cash deposits in a current account is 12.5 lakhs. Withdrawal is 50k per week.

[Sawyer]

Originally Posted by SDP

I am not sure whether you meant it, but it did seemed like you looked at that practice approvingly here ->

http://www.team-bhp.com/forum/shifti...ml#post4093663
All I said there was that the only liability the store would have, would be under income tax law - assuming of course that other than the fact the transaction was in old notes, it was otherwise honest with no over invoicing or cooking of the books. As I recall, that was in the context of discussing the meaning of withdrawal of legal tender status. All the ones I have commended in more stronger terms are in later posts and are service providers that continue to accept old notes, to the extent they were before, for services rendered. And the unwillingness of many in that category to serve customers without receiving legal tender is causing the bulk of the chaos.

Also, would you be kind enough to point me to your post that you mentioned where you have listed the ten odd establishments where this should be OK so that I can work on another example?

Yep, #1001. You are not the one quoted in it, that is why you must have overlooked it. Remember, though we are talking of money laundering potential in honest establishments whose only "crime" is taking the old notes and rendering the service they are meant to provide in return as in the past. Exactly in the way you specified for the doctor and his antics, where the store was not party to any hanky panky other than accepting the old notes. Did my response to that answer your concerns, by the way; you did not say if it did/did not.
PS: Oops, I have messed up the quote thing...

[sgiitk]

If diyguy and samurai are to be believed then crowds have almost gone. In Kanpur I was talking to a businessman, and he said that he did not see crowds of more than six or so at any bank branch. Today I was in SCB, they have done away with the additional counters, so had three counters out which two were reserved for SBI customers. i crowd which I was there was about 10 per counter. I am told almost all were SCB customers.

[mayankk]

Not too sure about the crowds going anywhere.
This is from 2 hours back, and it has been the same ever since the, er, decison.

[SDP]

Originally Posted by Sawyer

Yep, #1001. You are not the one quoted in it, that is why you must have overlooked it. Remember, though we are talking of money laundering potential in honest establishments whose only "crime" is taking the old notes and rendering the service they are meant to provide in return as in the past. Exactly in the way you specified for the doctor and his antics, where the store was not party to any hanky panky other than accepting the old notes. Did my response to that answer your concerns, by the way; you did not say if it did/did not.
PS: Oops, I have messed up the quote thing...

Oh, completely missed that post of yours!

Here're a couple of examples from the list:
1. The doctor with 6L in black cash decides to throw a big party for his friends and family on 12th Nov. Some 40-50 people turn up. Good quality wine flows freely. The Doc got away disposing off 2L of black money in cash by paying in old notes and had a good time while at it.

2. Construction material - bricks. A small time construction guy goes to his regular bricks supplier. Orders and pays 2L in old notes. Possibly pays a slight premium for a deal - I might not need the entire lot... whatever I don't use, you take it back and refund the money. After a month, when the dust is settled, he returns half the brics and picks up refund in crisp 2000Rs notes. OR sells the entire lot to someone at 80% price and gets cash payment in new currency notes. Third scenario - He pays for and gets 10L worth of bricks. Brick is non-perishable item. He rents out a warehouse for the bricks and uses them for next 6 month without having to pay a single rupee in white for next 6 months.

[sachinayak]

In my area (HSR Layout, Bangalore), I have not come across any ATM with less than 50-70 people in the queue. People are so desperate that when they see the bank vehicle, they start queueing up. In my office we have 2 ATM's, both command much longer queues. In fact people queue even before money had been filled (based on the ATM loading tines on previous days).

I made at least 5-6 unsuccessful trips to withdraw cash, before taking half day off from work, and withdrawing it much easily directly from the bank (instead of the ATM). I was lucky that the cash vehicle just arrived at the bank minutes before I got there.

[Sawyer]

Originally Posted by Turbanator

Ok, Let's say if his husband is below IT return limit and she has still saved money - 50,000 Per Year for past 10 Years or case 2 if she also works part time and has saved major earnings of her. I am sure there will be enough cases like this. Will arguments of IT hold good in court in case one does not agree to finding of officers ?

This is a more complicated case, and needs to be well presented to be successful - more business for the CA! And yes, there is a established procedure of appeals in Income tax law already which can be resorted to if there is a disagreement with the findings.

But this brings to light in my mind another big problem looming everywhere, I have no way of even guessing how big. The thing is, the GOI is being honest in saying that honest people have nothing to worry about. But here is the thing - till now, honest people did not have to prove their honesty, if they, like the lady in question, had cash in the house, earned legitimately, tax paid and stored for legitimate reasons. And there must be millions of such people - I have no clue how many.

But now, if the cash is in excess of Rs 2.5 lakhs, and is deposited as it must be for honest people, they will have to each prove their honesty to the IT department; which is a giant task on both sides. I have a feeling that the limit is too low; of course the government is at liberty to change it if they think fit, which is what I think will happen in practice via prioritisation of the issue of notices by using some kind of 80/20 approach.

Originally Posted by SDP

Here're a couple of examples from the list:
1. The Doc got away disposing off 2L of black money in cash

2. Construction material - bricks. He rents out a warehouse for the bricks and uses them for next 6 month without having to pay a single rupee in white for next 6 months.

Good ones, and perhaps Construction materials should not be on the list, it is not a consumable or a service which are the only two things that ought to be there on it.
Even so, my response to both:
In the first case, black money has been consumed, not laundered. It is not different from what I believe happened the evening of Nov 8, when lots of ladies did a lot of shopping the malls - Louis Vitton bags and the like. But in practice this is a drop in the bucket. There better be far far more black money - for this whole exercise and its pain to be justified - than can be drunk away even in 50 days of steady drinking! Or eating. And to the extent it got consumed, it has at least contributed now to the income of the seller, and to income tax for the government. So there is some good even there.

As to construction materials, in addition to my comment above, I can't see how practical it is to buy, store, look after and usefully consume in the future, materials to the extent that will make a big dent in the hoard of cash. Again, I am saying this with no clue on what is the size of the hoard. But construction material is cheap, high in volume and therefore needs a lot of warehousing space to amount to a lot of value in rupees for it to make a dent. Plus there has to be enough inventory on hand with the sellers to start with.

Essentially, black money is held in notes form because it is compact, won't depreciate higher than the inflation rate, isn't expensive to store, and can be easily exchanged for any other goods or services. It is a store of value, of black wealth. Replacing it with gold meets all the above needs of a store of value. Or with diamonds, or US dollars. Even, to a very limited extent, with a washing machine from the earlier example. But replacing it with services used, or consumables eaten or otherwise consumed, and delivered by the services economy doesn't meet those needs. But it is precisely the hit that this service economy has taken for dearth of cash is what is affecting the large majority of people, leading to the scramble for cash to obtain these services.

This begs the question: could all the smart minds in Delhi not come up with what truly would have been a surgical strike that achieves may be 80% of the objective without collateral damage, instead of an explosion that achieves 100% of the results with massive collateral damage?

This becomes even more of a question IF the often stated statistic, that this objective - elimination of black wealth held in 500/1000 rupee notes - is only 6% of the total store of black wealth, is true. Why so much damage for so little effect IF that be the case?

[nowwhat?]

Originally Posted by sachinayak

In my area (HSR Layout, Bangalore), I have not come across any ATM with less than 50-70 people in the queue. People are so desperate that when they see the bank vehicle, they start queueing up. In my office we have 2 ATM's, both command much longer queues. In fact people queue even before money had been filled (based on the ATM loading tines on previous days).

I made at least 5-6 unsuccessful trips to withdraw cash, before taking half day off from work, and withdrawing it much easily directly from the bank (instead of the ATM). I was lucky that the cash vehicle just arrived at the bank minutes before I got there.

I live in Koramangala and I just went to a nearby Axis Bank (not the one I have an account in) and withdrew 10K cash last week, all in ₹50 notes. As far as I can see, everyone in my neighborhood in Koramangala is back to paying cash.

The day I went (I think the 12th), ATMs were not working and I honestly would prefer to stand in a line in the bank than at the ATM.

[poloman]

ATM queues are still a reality. But normally on weekends this was the case earlier also, atleast in Bangalore. But numbers have now doubled or tripled. The queues in banks are deceiving. They are allowing only 10 customers inside the bank at time due to safety reasons atleast in the bank I visited. Expectedly the queue was on road.

[ramzsys]

Indian Overseas Bank, Indian Bank at Pollachi.

Today being a no-exchange day, i went to renew my FD. There were just a couple of people in the queue to deposit cash in both the banks. These banks usually cater to the middle class in TN, so i guess the cumulative receipts are tapering. Indian bank had ran out of 100s and only 2000s are given.

Paid for the bike service with a 2000 rupee note( Bill: Rs.600 ). Cashier said only old notes are possible. Agreed to it and filled fuel for the bike & car. In petrol bunks still there's still these bikers giving a 500/1000 and asking to fill for 100. ''Yesterday also i filled for 100 only.. you gave change. why are you refusing today?'' Bunk also had sapota fruits for sale to adjust.

Earlier i needed 100s to pay laborers and the milkman came to the rescue. He collected the fresh 2000 and returned 100s. I casually remarked that it is a color xerox, he didn't bother to check it at all. Smiles exchanged, felt good.

[400notout]

Originally Posted by ramzsys

Indian Overseas Bank, Indian Bank at Pollachi.

Today being a no-exchange day, i went to renew my FD. There were just a couple of people in the queue to deposit cash in both the banks.

Similar story with me today morning. Oriental bank of commerce. Within 10 minutes withdrew 10k. Got 4 notes of 2k, 20 of 100. After me there was 1 lady. I think smaller banks are better to deal with such situations. On my way back things were similar at ICICI bank. I also have an HDFC a/c didnt bother visiting it even once. The queue is mostly longer outside banks like HDFC, ICICI, SBI and Axis. I live in a area which has lesser population in comparison, the situation would be worse in highly populated areas. I withdrew this cash as there was none in the house. I don't intend on using it, will still use cards.

[SDP]

Originally Posted by Sawyer

...But in practice this is a drop in the bucket. There better be far far more black money - for this whole exercise and its pain to be justified - than can be drunk away even in 50 days of steady drinking! Or eating. And to the extent it got consumed, it has at least contributed now to the income of the seller, and to income tax for the government. So there is some good even there.
....

As to construction materials, in addition to my comment above, I can't see how practical it is to buy, store, look after and usefully consume in the future, materials to the extent that will make a big dent in the hoard of cash. Again, I am saying this with no clue on what is the size of the hoard. ...

Size of the hoard - You must have noticed that in the Doctor example I took only 6 lakhs ..i.e. a year's worth of black money. The Doctor must be doing practice since a decade and there is easily 30-50 Lakhs of undeclared income from that decade. Where's that money? Its in the diamond necklace worn by the Doctor's wife and in the holiday home and in the tasteful interior of their current residence. So, my guess is - size of the hoard is possibly a few lakhs for most people and not multiple Crores.

Those drops when accumulated would hopefully fill a sizable bucket.

About the examples, these are examples that I thought of in about 15 mins and I am a simple straightforward salaried person. I am pretty sure the street-smart jugaadu average Indian is significantly more innovative while figuring out how to dispose off/convert his hoard. That's the reason why the Govt is trying to restrict the avenues of spending old notes as much as possible. That's the same reason why it was announced at 8pm with a 4 hour window before the notes became invalid.

When you advise people that its OK and legal to still use the old notes, I don't doubt your intention. In fact I appreciate the thought that people like you are trying to ease the cash crunch situation. The only problem is that when you show genuine people that they have a foot in the door and a way out, many others are watching and planning to knock down the same door by using their jugaadu brains.