❓Ask Duta: How does the new currency scheme help curb black money❓

  |   India News

A number of readers have asked how the new scheme of the Modi Govt. to withdraw the ₹500 and 1000 notes issued before Nov 8th helps curtail "black money".

Firstly, the thrust of the scheme is both to attack the counterfeit menace as well as to check the "black money" problem. Obviously, the withdrawal of ₹500 and 1000 notes and introduction of new notes will help tackle the existing counterfeit menace.

Now, with respect to black money, those who have unaccounted cash (ie black money) on hand cannot use those banknotes as they no longer have valid legal status and so will likely have to deposit the same and in case of large amounts attract scrutiny and possible tax & penalty consequences. This is how most the black money is likely to be unearthed.

Also, the PM announced the scheme with immediate effect for this reason because otherwise the black money holders to convert their holdings into assets; so with this scheme coming into immediate effect from November 9th 2016, seller of jewellery or land etc will NOT agree to such banknotes, paid to them by buyers with black money on hand, as they (sellers) will be then left holding the burden of these invalid banknotes.

Again, this scheme should not affect genuine cash holders who have withdrawn amounts for business or purchases or who have obtained cash from small payers or from agriculture income. Any accounted amounts should be fine to deposit as noted in other articles.