Demonetisation and its Aftermath

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Lord Nemesis said:
Yeah, its meant to punish the black money hoarders as they would not be able to go to banks and deposit.
But also at the same time, this gives the additional opportunity/possibility for taxing the tax payers again on money for which they already paid their taxes.

For instance, I pay all my taxes. From my savings after the taxes, lets say that an year or two ago, I withdrew 1 Lac to keep as reserve cash for emergencies. Over this period, this cash is stagnant and unlike a bank deposit does not generate any interest, so there is no additional tax to pay. But now, I have to deposit that amount in the bank again. How do I prove that this amount is already tax cleared and not new income generated this year or income from an unknown/undeclared source? So, theoretically, the IT dept can demand tax on this amount again. Not sure if they are going to go that route, but they could if they want to.

BTW, did anybody else get the certification of appreciation from CBDT for paying taxes fully and on time? That's another gimmick this year. Apparently, 8.43 lac certificates were sent out which makes up 6.5% of the 1% tax payers in the country.
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I recently withdrew 2L for spouse surgery to be planned next week, because that hospital doesn't accept cards, it's going to be inconvenient for me to readjust, but it's not a big deal anyway. I'll think I'm doing my bit. I paid salaries to the maid and driver to their bank accounts instead of cash & they happily agreed :)

Incidentally, I got a Gold (if I remember correctly) certificate from IT Dept for promptly paying the taxes as well. I wasn't aware that it's that rare - I thought the certificate was given to everyone paying the taxes depending upon their assessment.

Social Media is flooded with messages, even Modi's harshest critics are supporting this move wholeheartedly. Somehow our most revered anti-corruption crusaders (Mamta & Kejri) are pretty against the move, which is surprising.
 
drkrack said:
Finally, Samsung is not the only one who's recalling the NOTES this year !!
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that's a nice one :p

In any case, things aren't looking good. 86% cash in circulation has suddenly vanished overnight. There isn't enough legal tender in circulation (only 14%) for business to go on as usual. Based on statements in news paper, the 2 day closure of ATM's is just to just to re-calibrate the machines. While its announced that currency would be in ATM's by 11th, based on the tone of statements from banks, getting the money into the machines is going to to take time and will be in very short supply for some time to come.The logistics is going to be the biggest problem..

All the the small to mid tier businesses have closed shutters due to lack of currency. Even the pharmacies near my house are closed. Even if they can accept Rs 500 notes, they will still need to have smaller change to conduct business which in short supply presently.
My cab driver was telling me that many petrol bunks in Hyderabad have min transaction set at Rs 500 and also giving fuel worth Rs 400 only. This expected to get even worse.

Businesses/change brokers who have stockpiled Rs 100 or below currency are apparently selling them at insane exchange rates of Rs 200-300 for Rs 500. A colleague was telling me that one of his elderly neighbors got Rs 400 in exchange for Rs 1000 (in Rs 500 notes)

How are things in your respective places.
 
Lord Nemesis said:
BTW, did anybody else get the certification of appreciation from CBDT for paying taxes fully and on time? That's another gimmick this year. Apparently, 8.43 lac certificates were sent out which makes up 6.5% of the 1% tax payers in the country.
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Yep, my company directors got them. They were very much surprised.[DOUBLEPOST=1478671839][/DOUBLEPOST]
drkrack said:
I paid salaries to the maid and driver to their bank accounts instead of cash & they happily agreed :)
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Hopefully, after this, they would allow us to do the same. I don't understand why they can't take cheques.
 
drkrack said:
Incidentally, I got a Gold (if I remember correctly) certificate from IT Dept for promptly paying the taxes as well. I wasn't aware that it's that rare - I thought the certificate was given to everyone paying the taxes depending upon their assessment.
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No it wasn't give to every one. You need to have paid taxes in full without any pending liability and should also have completed the ITR-V generation and filing before the stipulated due date. Once you meet those criteria, the award category is based on amount of taxes paid

Platinum : Tax contributed Rs. 1 Crore and above
Gold : Tax contributed Rs. 50Lakh to Rs. 1 Crore
Silver : Tax contributed Rs. 10Lakh to Rs.50 Lakh
Bronze : Tax contributed Rs. 1Lakh to Rs.10 Lakh

To get gold category, you need to have paid over 50 Lac in taxes. I myself got in silver category.
 
rdst_1 said:
As for the Rs. 20000/wk ATM limit, I think LN, you are forgetting that you can also walk into the branch and make a cash withdrawal just like old times.
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Actually you can't in most cases. Most banks these days (both nationalized and private) refuse to give cash against withdrawal slips. You either need to use a Cheque if you have that facility or just withdraw from ATM's. Private bank branches don't even keep big cash reserves and there are occasional cases when they refused cashing Cheques. SBI allows withdrawal at branch for those who don't have either cheque or ATM card, but the same is also limited to 5k if I am right.
 
Lord Nemesis said:
Actually you can't in most cases. Most banks these days (both nationalized and private) refuse to give cash against withdrawal slips. You either need to use a Cheque if you have that facility or just withdraw from ATM's. Private bank branches don't even keep big cash reserves and there are occasional cases when they refused cashing Cheques. SBI allows withdrawal at branch for those who don't have either cheque or ATM card, but the same is also limited to 5k if I am right.
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My grandfather who used to live alone in this village where I am living now used to make cash withdrawals upto 50k just with a withdrawal slip and his passbook. I see many old people doing the same still today over here. Just a month or so ago, I withdrew 2L in cash with a cheque and see many people do the same even today. Yes it will be difficult and a bit dangerous to carry that cash for a few months (until the new notes come out), but that is such a small inconvenience.
Obviously, we'll come to know how everything pans out in the next week or so, but I don't think people living in most cities have anything to worry about. If this makes small traders start offering more payment options then it is a more than welcome side-effect in my opinion.
 
http://timesofindia.indiatimes.com/...eed-to-be-withdrawn/articleshow/55322945.cms?

The biggest fear is that ATMs, which see less than 150 transactions a day could see their load go up manifold, requiring banks to replenish them multiple times. There are 2.15 lakh ATMs in India but since cash can be transported only with armed guards there are less than 10000 cash vans. This could cause a problem in refilling ATMs with Rs 100 and Rs 50 notes which are the only legal tender that can be used in the ATMs until the new Rs 2,000 notes are printed.

"There is a large stash of Rs 100 and Rs 50 notes with RBI. However, low value notes would mean an increase in the number of transactions," said Mani Mamallan, founder md of Electronic Payment and Services which manages ATMs for many public sector banks. At present customers are allowed only five free ATM transactions in a month in urban areas.

"We have to reconfigure our systems. If you notice the average ATM dispensation slot -- it is about 34th of an inch. Now per transaction if a person were to withdraw Rs 10,000, the ATM will not be able to push out 1000 notes of Rs 100 denomination at one go.ATM transaction limits will have to be set much lower," said a HDFC Bank executive.
 
rdst_1 said:
So, I live in a rural area where it is quite hard to find shops which accept cards. Yet, I think, since the banks are only closed for only one day, this is going to be a smooth transition. For today, the day the banks are closed, shopkeepers are not going to say no to accepting 500 and 1000 notes. They can get them exchanged the next day themselves.
As for the Rs. 20000/wk ATM limit, I think LN, you are forgetting that you can also walk into the branch and make a cash withdrawal just like old times.

Actually, I think that we should phase out old notes at regular intervals as that will definitely discourage hoarding of black money.
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Actually, 10k per day and 20k per week limit is for bank withdrawal. ATM withdrawal limit is set to 2k per day till 18th November and 4k per day after that until situation calms down. I hope RBI printed enough 100 Rs note as well as the new 500 and 2000 notes and also pay a bit more attention to the ATMs and Banks in rural areas as we(people liviing in cities) can use cards in most places.
 
Lord Nemesis said:
No it wasn't give to every one. You need to have paid taxes in full without any pending liability and should also have completed the ITR-V generation and filing before the stipulated due date. Once you meet those criteria, the award category is based on amount of taxes paid

Platinum : Tax contributed Rs. 1 Crore and above
Gold : Tax contributed Rs. 50Lakh to Rs. 1 Crore
Silver : Tax contributed Rs. 10Lakh to Rs.50 Lakh
Bronze : Tax contributed Rs. 1Lakh to Rs.10 Lakh

To get gold category, you need to have paid over 50 Lac in taxes. I myself got in silver category.
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I always used to feel cheated whenever I filed returns, especially with growing scams during UPA2; looting the exchequer , not anymore, now feel that My CA did a good job.

The inconvenience & herd mentality will not change so soon, people extorted money even during Chennai Floods, this is a major economic calamity & these will be expected. We should be doing our part to curtail such occurrences. Our systems are so much rotten to core that, someone somewhere has to be bold and take the initiation. It is a good start , but we should stand united with PMO , its now or Never Now.
Nation first seems to be the winning ideology everywhere.
 
drkrack said:
I always used to feel cheated whenever I filed returns, especially with growing scams during UPA2; looting the exchequer , not anymore, now feel that My CA did a good job.

The inconvenience & herd mentality will not change so soon, people extorted money even during Chennai Floods, this is a major economic calamity & these will be expected. We should be doing our part to curtail such occurrences. Our systems are so much rotten to core that, someone somewhere has to be bold and take the initiation. It is a good start , but we should stand united with PMO , its now or Never Now.
Nation first seems to be the winning ideology everywhere.
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Just wait for BJP2 and the scams will be back. Even now, Vyapam scam was covered up by killing so many people. And the industrialists like Adani and others have already been rewarded by giving them govt lands at cheap rates.
I can appreciate this good move but there have been a lot of cases already that have clearly shown to me that this govt is not a lot different from previous ones.
 
During this week, shops which sell electronic items will have a great time. Most people having black money will disburse of it by buying TV's/AC/phones/laptops etc. 500/1000 may not be legal tender but if you are getting such good sales, people will readily accept the money and fulfill their sales target. Also people won't haggle during this time as the salesperson may not accept the old 500/1000 notes if the buyer tries to reduce his cut. [emoji14]

Lesser priced 2nd hand cars are a good place of investment for people having lots of black money.

Huge number of unemployed youth will make a killing the next 50 days. They take a cut and deposit money in their account. Once money can be taken out from ATM, take it out and give the person back the agreed amount. They will also use their grandmother's, grandfather's and mom, dad's account for this purpose.
 
This is a stupid move. Aside from the obviously stupid move of suddenly dropping the news on every one, it is claimed that this will help curtail black money.

1. Do people still believe that the corrupt keep their black money stashed in their home? Most of them are clever enough to stash it offshore tax havens.

2. Usually countries don't print currency with high denomination in order to keep black money in check. So someone please tell me how is swapping 1000 Rs. note for 2000 Rs. note is going to achieve that? o_O

And let's forget the hoax of GPS chips. :banghead:
 
Mr.J said:
Do people still believe that the corrupt keep their black money stashed in their home? Most of them are clever enough to stash it offshore tax havens.
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That's just a part of the targeted demographic, stashing money in offshore shell companies is a different level altogether and not every tax evader can manage to pull it off except for the really big fish.
There are a lot of medium to small fry making money in the tens of crores who don't pay taxes and instead deal mostly in cash especially when it comes to real estate.

Mr.J said:
So someone please tell me how is swapping 1000 Rs. note for 2000 Rs. note is going to achieve that?
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It's not about exchanging one for the other, it's about getting rid of the unaccounted wealth that's present in the system which is the primary reason for corruption.
 
http://www.indiatimes.com/news/indi...-and-paying-only-rs-300-in-return-265176.html

To be honest, many brokers are offering only Rs 200 per 500.

Lets just hope that there would be at least some money coming into ATM's by next two weeks at least. At least some of the people I know are in a fix due to not having money. One guy had to break his daughters piggy bank and has only that loose change (coins) to use till he could get money from ATM's.

http://timesofindia.indiatimes.com/...y-on-income-mismatch/articleshow/55337762.cms

Again, while this would catch tax evaders who didn't pay any tax at all, what about the situation for people who do pay the taxes but have such an amount in tax cleared cash. How does one prove that such an amount is already tax cleared and not undeclared income? If somebody withdraws money now and then to the point that he has Rs 3 Lac in cash. He will not be able to prove that the source of that money is the withdrawals over multiple years and that its all tax cleared. So, that can mean that he will have to pay the taxes again with penalty. 90k (taxes @ 30%) + 180k (penalty @ 200%) = 270k of the amount to IT dept.
 
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My dad told me about a person who has withdrawn few lacs to purchase jewellery for his daughter at wedding.
Now the money is stuck; gold prices gone up and marriage date is approaching.
Extremely difficult situation for a girl's parents.
 
It's certainly better to let the entire nation suffer, so that a some of the guilty may be punished.
 
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