Old notes exchange stopped; 60% tax on unaccounted deposits likely

Indian currency notes

New Delhi, November 25: As government ceases to swap old currency notes of Rs 500 and Rs 1000 over the counter, it may soon announce 60% tax on unaccounted bank deposits following November 8 currency ban.

Read More: Government ceases currency exchange over the counter.

While taking a roll back from its earlier promise to raise the exchange limit after November 24, the finance ministry defended its decision to suddenly suspend over-the-counter exchange as a measure to “encourage people who are still unbanked to open new bank accounts.”

“We had a videoconference with heads of all banks, single agenda of (the) meet was to expand the digital banking itself,” Finance Minister told the media after the meeting.

PM Modi also pitched in about the cashless economy as a need of the nation earlier in the day. While neither PM or FM touched upon the fact that how would people in rural areas would address this digital banking bug. As, there are many places where banks are not accessible for several kilometres  or operate only once a week.

According to a source, however, one of the reasons for not permitting any more exchange of old currency over the counter was misuse of the facility by many by using “cash mules” to convert black to white.

“This is happening because of its (over-the-counter currency exchange) misuse where cash mules were being used by some people to deposit their unaccounted high value cash. Also, there is this whole purpose of throwing out the informal economy and bringing it into the formal economy,” he said.

Besides, in the cabinet meeting yesterday government has mulled over introducing 60% tax over the unaccounted deposits following the demonetisation. The Cabinet was keen to tax all unaccounted money in bank accounts during a 50-day window from November 10 to December 30 as per the source.

Earlier, government had announced that offenders would be charged up to 200% tax penalty.

Government is also planning to bring an amendment to the Income-Tax Act during the ongoing winter session of Parliament. It is mulling over to levy a tax higher than 45% and probably close to 60 % on the unaccounted deposits so that it is lower than the penalty being charged on black money disclosed in the Income Disclosure Scheme 2016.

Wefornews Bureau

Related Posts