The Modi government has been criticized by its detractors for making a virtual midnight crackdown on high value currency notes—Rs 500 and Rs 1000.
True, the sudden and peremptory declaration of these two denominations as not making muster as legal tender has inconvenienced common folks like farmers, householders, etc for a day but it did catch the crooks hoarding black money with their pants down. To be sure, the fleet-footed among them rushed to obliging jewellers post-haste on the night of November 8 to beat the 12 AM 9
November deadline but the government has girded up its loins to gun after the jewellers by asking them to disclose the PAN of such buyers. The point is demonetisation required a peremptory and sudden declaration lest the wily black money owners took advantage of the latitude offered.
However, the same government seems to have goofed up on the follow-up action by going to town of what it intends to do with the deposits between 10 November and 30 December 2016 into bank accounts of such currency notes—-deposits of Rs 2.5 lakh and more to attract scrutiny by the tax sleuths who would impose 30 percent tax plus penalty of 200 percent thus making a grand tally of 90 percent on those who had not declared the income represented by such cash in their income tax returns. Pray where was the need? The shock and awe factor characterizing the demonetization should have characterised the follow up plans too. In other words, the crooks should have been allowed to stew in their own juice. But in the wake of this goof-up, they would take care to steer clear of the dreaded figure while depositing cash of 500 and 1000 rupee notes. Deposits of Rs 2.49 lac could be common.
As it is, cash deposits of Rs 50,000 and more requires mandatory furnishing of PAN to the bank which in turns passes on the information to the income tax department for whatever action it deems fit. Now it seems in the wake of demonetization the threshold has been upped to Rs 2.5 lakh for those depositing the discredited notes during 10 November and 30 December, 2016.
The exchange window is likely to be more popular than the deposit window in banks during 10th November to 25th November. One can exchange the old discredited notes for new ones carrying legitimacy upto Rs 4,000 during this fortnight.
For crooks this is a godsend opportunity, the one that is infinitely better than offering themselves in the chopping block by depositing into their accounts though it would call for frequent and numerous visits to hundreds of such exchange counters especially if their stash is heavy.