NEW DELHI: Having withdrawn 86% of the currency from the Indian market, the government will now be focusing on replacing the old currency with the new hard-to-fake currencies of Rs 500 and Rs 2000. Residents have already queued up before the banks to replace the old currency notes with the newer ones. The Reserve Bank of India on the other hand, directed all the commercial and nationalized banks in the country to serve on the weekend, keeping in view of the rush of people wanting to exchange the defunct currency notes.
Tax department officials were also alerted to keep a close monitoring of all the transactions of higher value. Finance Minister Arun Jaitley had already confirmed that there will not be any immunity from the tax exemption for depositing cash in bank accounts. The minister clarified that the law of the land will apply to every transaction of higher value. Which means, if a non-taxpayer deposits anything more than Rs 2,50,000 then he will attract 200% of tax amount as penalty for not disclosing the income as per the rules of the Income tax department.
On the other hand, noting the inconvenience being caused to the citizens, the government has expanded the list of emergency services where the old notes can still be tendered. As per the guidelines the old notes can be used for payment in the government hospitals, private pharmacies, Railway counters, purchase of cylinders and to pay for the toll on the national highways. The old notes can be further used to pay at Petrol pumps, crematoria, and public transports. However, this facility will only be available till November 11, 2016.
The government has also made arrangements for the foreign tourists to exchange cash at the airport counters. They will be issued a maximum of Rs 5000 cash after confirming the identity details.
Banks and ATMs which have been shut down on Wednesday to restock with the new currency will start functioning from Thursday with limitations on transactions. Every individual will be free to deposit unrestricted amount of money in their bank account provided that it is KYC compliant but, can withdraw only a maximum of Rs 4000 per day from a bank with a weekly cap of Rs 20,000. Similar restrictions will apply to ATM transactions, as an individual can only withdraw Rs 2,000 per day with a maximum limit of Rs 10,000 in a week.
Finance Minister Arun Jaitely said that the limitations on transactions will be reviewed once the banks have been supplied with adequate cash. “The Reserve Bank of India will be sending stocks of new currency notes to all the Indian banks and a situation of normality is expected in 2- weeks”, he said.