[binand]

Originally Posted by anujmishra

Exactly, Infact I withdrawn 22K in less than 20 minutes from ICICI bank by cheque.

Ditto here. I stood in line for about 15-20 minutes to withdraw 10K via a self cheque at HDFC Bank Karthik Nagar yesterday.

On the other hand, earlier this morning I saw a long snaking queue outside SBI HAL (the one opposite to HAL market) which looked like a 2-hour one. Interestingly the SBI near my home (Yemalur) had hardly any crowd today.

I am guessing two things:

1. Long lines are for note exchange, not for account deposit or withdrawal. Probably those who deal predominantly in cash are still attempting to do so instead of switching to electronic/banking channels - maybe out of compulsion rather than choice.
   
2. People are still flocking to their "home bank" for exchange rather than picking up the nearest bank or bank with shortest queue. On JB Nagar main road, there is an SBH, an ICICI Bank and an HDFC Bank (I think there are Federal Bank and couple of others too), but none of them had even a fraction of the crowd I saw at SBI.

I am going to Kerala tomorrow; will take a look there. Apparently the state is among the worst affected, primarily because of (a) low electronic banking penetration despite high urbanisation, (b) remittance economy dependent on non-banking channels (legal and illegal ones), and (c) RBI shutting out the cooperative banks from the currency exchange programme due to their reluctance to comply with other, earlier banking norms.

[hemanth.anand]

My experience with cash withdrawal in a simple word: Inconvenience, but not regretted.

Last week withdrew 2000 from an ATM in my company campus. After all people either in panic or need emptied all 100s by entering 1900 withdrawal amount, I withdrew 2000 just to see and experience the new note.
Then I needed cash for an event at home during the weekend. All ATMs near my home had serpentine queues or closed or had only 2K notes.

So went to a HDFC Bank at 11AM and stood in a queue. They were allowing 10 people at a time inside the bank and the queue was only outside the bank. Although queue looked stagnant outside, it was moving inside the bank. And the inside was free and not suffocating. A person from the bank was giving all information to people outside and hence people were also calm.
When my turn came, I gave a self cheque and I asked the cashier how much I can withdraw. She checked and told 22000(since I had drawn 2000 from the ATM) I wrote an amount of 22000. She asked me what denominations I need. I told I don't need 2000s and anything else will do. I got the entire 22k in combination of 100s 50s and 20s.
30minutes outside the bank and 15minutes in the bank is what I spent. Before this Demonetisation drive, On a Saturday, probably I would've spent 20 minutes less

After all these, we went to ICICI Bank so that my wife could withdraw. time spent was more or less same, but they had only 2000s and withdrew only around 10K as we didn't need more than that for the event. Apart from that, I had 600 rupees in 100s in my wallet on 8th November and now I have 400.

[Lobogris]

Originally Posted by diyguy

I like the option of a penalty but not too stiff. I am a salaried guy and have no other source of income other than a few bad investments that just lose money than make. Reading the article, if Indonesia was able to mop up 30 times more in amnesty than India with about 40% of our GDP, it has some merit. I do not advocate something as low as 4% but a system that works is what should be emulated rather than trying to blaze a new path.

Originally Posted by diyguy

I agree on the hue and cry it will generate, but now, the folks who got into the tax payer attention cannot go back and going forward all their income will be taxable at normal rates. Isnt it better than paying very miniscule amounts? Wonder what the reaction has been in Indonesia.
This is a very debatable point and it is probably for historians and CFOs to deliberate about which system is better in the long run. From my perspective, since it uncovered 300B vs India's 10B, I am of the opinion that the Indonesia model works

I completely agree with the sentiments expressed above. If the penalty is nearly 50%, very few people will come forward unless they fear being audited or think there is a high chance of them being caught. On the other hand, if the penalty is, say 10%, most people would have come clean as the cost of holding black money is probably higher than the 10% loss. Even though it might seem unfair, one has to be a realist. If we take the Indonesian example as a benchmark, we could have mopped up nearly 700 billion $ in such an exercise! That would mean a direct 70 billion $ as penalty to the government and a lot of money in the banking system to be used for loans, infrastructure development and so on. In addition, the government would be able to tax the future income from this large asset base. This 700 billion $ is equivalent to over 20 years of FDI inflows at current levels and is twice the yearly revenue of GOI. It would also have put an end to the futile efforts of chasing black money domestically and abroad.

To change people's mindsets and wipe the slate clean is not easy. If I have 1 crore Rs of black money, even if I want to change, I won't be able to make myself lose 45 lakhs or nearly half my corpus just to come clean. No matter how hard the government acts, I will keep finding ways to keep it hidden. Even a haircut of 20% to exchange it is better than a loss of 45%. Thus my black money would grow from 1 crore to 2 and then 4 and so on.

The government could have pushed such an amnesty scheme at 10% initially followed by a second one at 30% after the demonetisation. This would have ensured a significant level of compliance and the public could have been spared the hassle by providing a 60 day window before the currency became invalid. Most black money holders would have taken the 30% official cut rather than pay 20% and still keep it hidden via unofficial channels or trying to purchase gold or real estate as they would lose money there as well. We could have easily collected over 1 trillion $ with this method- 700 billion before and at least half after demonetisation.

[pramodkumar]

Guys,

There was talks on the radio regarding 50 day wavier of loans by bank, can anyone elaborate on that?

[Sawyer]

Originally Posted by mayankk

Well, how about this. If there was a horse, this is from his mouth:
banning-notes-will-not-curb-black-money-says-thinktank-that-called-for-demonetisation

Thank you for the link; I read the report in my paper this morning; news item of the day, as far as I am concerned.

This entire idea is a brilliant one; it so brilliant that it is also completely unworkable; I am not happy to say this, because if it works, it can address what I see as the root cause for black money: dishonest government.

In the early days of this thread, this entire idea has been posted by a member and my response was the same - not gonna happen. I was scoffed at immediately for saying this.

Before I explain why I think this way, a short summary of the solution proposed; for full details see the link. And as today's report clarifies, the sequence of events is also very critical to its implementation.

1. Completely scrap ALL existing taxes levied by all taxing entities in India; direct, indirect, property taxes - every tax.
2. Collect a tax of 2-3 percent on every banking transaction, other than cash deposits and withdrawals; the calculation is that this amount collected even today will exceed the total loss from 1 above. It is estimated to not have to be more than 3% for balancing the books against the loss of from 1.
3. After 1 and 2 are done, start a systematic and planned demonetisation process the object of which is to promote the move from cash to bank channels for aiding transparency. And this will also swell the tax collected in 2 above.
4. According to a formula based on how the tax collected today is reaching all the bodies, the tax in 2 above will be automatically distributed to them, including a handling charge for the banks.

So breathtakingly neat, so unique globally, so workable; why then do I think it is never going to happen?

First, because of the consequences on the jobs and salaries on all involved today in 1; a massive bureaucracy with its tentacles reaching into all of the land will at one stroke be jobless AND powerless. Actually, because the tax collected under 1 and 2 are said to be close to identical, the country could still pay these people's salaries and ask them to sit at home without any difference on the government net revenue from what it is today. But even then, this will not happen. Why? Any guesses?

The other thing that will never let this happen is that where then is the scope for all the wheeling and dealing that happens between the centre and the states, and the states with the local bodies for how the tax revenues should be shared?

What has instead been done is cherry picking the easy way out: item 3 of the report has been picked out of turn and has not been implemented systematically as recommended, while leaving 1 and 2 parked in the queue.

That is why, at least in the paper, the leader of the movement Arthakranti, that attracted the attention of our leadership is reported to have said: I have never recommended this "operation without anaesthesia".

All I can say is that the movement and the people in it are very naive; very honest and well meaning, but childishly naive.

Seeing all this happening is another reason why I feel that every one of us, honest and dishonest, has been thrown under the bus, while the ones that are the cause of the dishonesty are the ones driving the bus. Again, I am not casting aspersions on any single individual, but on how things look on an overall basis.

[sukhoi30]

Originally Posted by hemanth.anand

My experience with cash withdrawal in a simple word: Inconvenience, but not regretted.

When my turn came, I gave a self cheque and I asked the cashier how much I can withdraw. She checked and told 22000(since I had drawn 2000 from the ATM) I wrote an amount of 22000. She asked me what denominations I need. I told I don't need 2000s and anything else will do. I got the entire 22k in combination of 100s 50s and 20s.
30minutes outside the bank and 15minutes in the bank is what I spent. Before this Demonetisation drive, On a Saturday, probably I would've spent 20 minutes less

After all these, we went to ICICI Bank so that my wife could withdraw. time spent was more or less same, but they had only 2000s and withdrew only around 10K as we didn't need more than that for the event. Apart from that, I had 600 rupees in 100s in my wallet on 8th November and now I have 400.

You are lucky that you got that many notes in smaller denominations. Many banks do not have stocks of those kind. Now, my request to you is to spend those notes so that they go back into circulation. Please do not keep it at home for so called "emergency".

In any case, do you really need that much cash at home?

[srishiva]

So, in BTT the tax would be levied when I receive a credit (only way for me is salary) ? It still assumes that all transactions happen through banks. Didn't people criticizing the current demonetisation say that its utopian for our country to think so ?

I dont agree that rural poor only use 50 or 100. Even a construction worker's wage (given weekly) runs into thousands and usually its done at least using 500 rupees.

The movement's demonetisation was mostly to discourage use of cash after going cashless or because its not needed. The current one is just an exercise to cause pain to people hoarding cash (either legally or illegally )

[hemanth.anand]

Originally Posted by sukhoi30

You are lucky that you got that many notes in smaller denominations. Many banks do not have stocks of those kind. Now, my request to you is to spend those notes so that they go back into circulation. Please do not keep it at home for so called "emergency".

In any case, do you really need that much cash at home?

As I mentioned in my post, it was for an event organised at home. I only have a 20 rupees bundle remaining with me and some notes of 2000. Everything else is spent. You are right; most of the cash crunch right now is because people are not putting the notes back in circulation

[nkrishnap]

Originally Posted by hemanth.anand

My experience with cash withdrawal in a simple word: Inconvenience, but not regretted.

Originally Posted by sukhoi30

You are lucky that you got that many notes in smaller denominations. Many banks do not have stocks of those kind. Now, my request to you is to spend those notes so that they go back into circulation. Please do not keep it at home for so called "emergency".

In any case, do you really need that much cash at home?

He mentioned it was for event, and I believe it would have already been spent. Mostly people who panic are the ones who end up storing notes for emergency. From November 8th to date, I have not visited bank or ATM. Managed to do all transactions either online or by swiping cards.

[Sawyer]

Originally Posted by srishiva

So, in BTT the tax would be levied when I receive a credit (only way for me is salary) ? It still assumes that all transactions happen through banks. Didn't people criticizing the current demonetisation say that its utopian for our country to think so ?

I dont agree that rural poor only use 50 or 100. Even a construction worker's wage (given weekly) runs into thousands and usually its done at least using 500 rupees.

The movement's demonetisation was mostly to discourage use of cash after going cashless or because its not needed. The current one is just an exercise to cause pain to people hoarding cash (either legally or illegally )

Yes, the BTT would be levied on salary credit to your bank; and there would be no TDS that your company would be doing first; in fact that cost for your company would also vanish. No HRA, no medical bills, no LTA receipts, all gone! And no taxes to be paid by your company; no income tax, no excise, no VAT, nothing! Abracadabra! Just the admin costs saving by all employers together would be massive and drive higher profitability and growth. Then there is the added productivity via time saved by all.

And no, there is no such assumption of all transactions happening through banks; the tax rate of 2-3% has been calculated on the existing level of bank transactions, of the kind that would be taxed, that would equalise the transaction tax total with the actual taxes of all sorts collected today by GOI+State Governments+Municipal Corporations+ Any other. Magic?

The last demonetisation was done in 1978 for Rs 1000 notes. Assuming an inflation rate of just 7%, the worth of the Rs 1000 note of today was approximately of Rs 70 then; Rs 500 note of today was just Rs 35 then. But notes up to Rs 100 were left untouched then because they were in common use. As the 500/1000 rupee notes are just now, especially the 500 ones.

The movement's suggested demonetisation, more importantly, is to be done after the government, down to the local municipality and even below, has cleaned up its house first via step 1, while still collecting all the taxes being collected today via step 2, at existing levels of bank usage.

Now, if a leader could make this move happen, in the sequence recommended, that is a leader I would respect. And he would certainly go down in history on par with, or even ahead of Mahatma Gandhi. Indeed he would be a global miracle - a Nobel prize for peace and economics would be one of the petty prizes in his collection. Or hers.

Sadly, I can't see one ever coming who can do this; so this will remain a dream.

We have so learned to live with the leeches, that it is impossible to imagine a life free of them.

PS: actually, saying that this is a leader I would respect is one of the biggest understatements I can come up with.

[NPV]

Originally Posted by nkrishnap

From November 8th to date, I have not visited bank or ATM. Managed to do all transactions either online or by swiping cards.

Yes, this is a good time like no other to try and reduce our dependence on cash.

Though some of our household expenses are in cash like maid's salary, buying vegetables from the the local street-side vendor, etc, we've made a conscious effort to avoid other expenses in cash (usually this is more of habit grown out of convenience).

[perty]

Originally Posted by hemanth.anand

You are right; most of the cash crunch right now is because people are not putting the notes back in circulation

I'm one of those (clutching on to lower denomination notes). Why ?
Mid last week, I had 7 notes of 100rs with me and was hoping that it will be good enough till the situation stabilizes.
Then, I had a puncture on the way to office in the morning. This was an eye opener.
The puncture shop guy refused to fix it if I didn't have 100rs notes and he charged 150 to fix it.
I've had 'experiences' with road side assistance in which they never showed up, so I didn't want to wait for them to save my 100rs notes and instead chose to bid farewell to a couple of them.

Neither me nor anyone else from my family has been able to get a 100rs note in the past week from ATMs or by visiting bank branches (we've visited two different banks in which we have accounts and I hunt ATMs every night).
Daily lunch costs 40rs. No other form of payment accepted other than cash.
So I should be able to push through for about 12 working days before I exhaust all my remaining 100 rs notes, provided there is no other emergency (another puncture, unexpected auto rickshaw trip), which parts those 100rs notes from me.
If I run out of 100rs notes earlier than that, then daily lunch will become a 200 rs affair at Subway or McD since they are the only ones who accept cards.
What will happen in emergencies is unknown. Will I part with my 100rs notes if the head of SBI exhorts us all to put them back into circulation asap ? No, thank you.

Had there been a sense of certainity about getting 100rs notes easily, nobody would have thought twice about using them to pay in small shops, auto rickshaws, for vegetables or any other daily transactions.
But the fear of being left stranded with only 2000rs notes is very real for now so holding on to the lower denominations till the situation improves is an unfortunate necessity.

[lambuhere1]

Have just confirmed that Dena Bank is issuing new 500 rupee notes.

Glad to see the light of them

[srishiva]

Originally Posted by Sawyer

Yes, the BTT would be levied on salary credit to ed to live with the leeches, that it is impossible to imagine a life free of them.

PS: actually, saying that this is a leader I would respect is one of the biggest understatements I can come up with.

I still doubt if the current bank transaction value mentioned would be tax liable for the total. There are lots of transactions that I myself do which should not be taxed. Same with people transferring amounts to help each etc. Have they considered this (not sure they can) while coming up with a value for current transactions ?

There might be some gotchas like the current scheme which everyone realized after experience.

[sukhoi30]

In all these discussions, there is one significant segment of population which no one seem to be talking about. These are doctors and surgeons.
This post is with due respect to all professional doctors out there including those in this forum.

Every time I visit a neighborhood clinic or hospital, I pay a consultation fees ranging from Rs. 200 to Rs. 1000. As far as I recall, every one takes only cash. I diligently ask for receipt, which they give, but mostly they are "loose" receipts.

These doctors also recommend multiple scans/tests etc. With many types of diseases with similar symptoms a blood test is always recommended by the doctor. Many diagnostic centers where such tests are conducted also insist on cash payment.

One of my friend's wife gave birth in a nearby hospital. The hospital charged him close to Rs. 1 Lac, but they took everything in cash, why? Because they wanted additional 3% for card swipe.

Another friend's mother-in-law underwent a knee operation in an upscale hospital. They also paid almost 50% cash with no receipt because otherwise they would charge additional 10% for taxes etc.

If you happen to visit any dentist, it is even worse. They have a hefty consultation fee. Not only that, they will make you undergo unnecessary procedures like X-Rays, teeth cleaning etc. and make you a big bill. Ever observed the interiors of a dentist clinic? They are done awesome.

I am not saying that all of these professionals are not paying taxes but there are lot of doctors/surgeons etc who are in this category.
Some doctors do this to recover the amount they paid to get through their MBBS degrees. Demonetization should have opened the eyes of such professionals.

But I still see that many clinics/doctors still taking cash. I do not see them doing any online transaction anytime soon. How can we get them to comply?