Rules changed again for using old Rs500 notes

Govt ends exemption for old notes to buy fuel, air tickets; move taken to curb misuse of old Rs500 notes, encourage people to switch to cashless transactions


In the past three weeks, the government has announced a number of relaxations for people stuck with the old currency notes only to then roll them back within days, citing their misuse. Photo: PTI
In the past three weeks, the government has announced a number of relaxations for people stuck with the old currency notes only to then roll them back within days, citing their misuse. Photo: PTI

New Delhi: Old Rs500 notes cannot be used for the purchase of airline tickets and automobile fuel with effect from Saturday.

The decision to stop the use of the old notes for airline ticket and fuel payments, notified by the government, is the latest in a series of flip-flops since the 9 November demonetisation of Rs1,000 and Rs500 banknotes.

The roads ministry, meanwhile decided not to extend their acceptance at highway toll booths.

More news on demonetisation

In the past three weeks, the government has announced a number of relaxations for people stuck with the old currency notes only to then roll them back within days, citing their misuse.

First, it raised the limit for exchange of old currency at bank counters, then lowered the limit and then called a halt to the currency exchange. It has also removed limits on daily withdrawals from bank accounts after first introducing such a limit.

The decision to remove petrol pumps and purchase of airline tickets from a list of exemptions was taken to curb the misuse of the old notes and to encourage people to switch to cashless transactions and use the new currency in circulation.

But given the cash shortages being reported across the country following the crediting of salaries into bank accounts of employees, any further curbs on the use of old notes may bring hardship to consumers.

Banks reported a shortage of cash on Thursday as well with long lines forming at the few bank branches and automated teller machines that were dispensing cash.

Justifying its decision to remove petrol pumps and airline tickets from the list of exemptions, the finance ministry said in a statement, “The processes of production, dispatch and distribution of currency notes have been continuing and more cash is flowing into the system steadily. The digital transactions have also made an impressive progress and are expected to significantly improve during the coming days.”

Petrol pumps and airline ticketing counters can accept payments through digital means, it added.

The use of the old Rs500 notes can continue for the purchase of cooking gas cylinders, the government said.

These notes will continue to be accepted at government hospitals and pharmacies, railway ticket counters, purchases at consumer co-operative societies, milk booths and for payment of court fees.

“The problem is that the government has already made a very big mistake of withdrawing 86% of the currency under circulation when it knew it will take six months to replace it. The general impression is that entire black money income will get converted into white. Then what is the whole point of demonetisation?” said N.C. Saxena, former member of the National Advisory Council. “The government is now panicky, which is prompting a change of decision every day.”

Meanwhile, the roads ministry is gearing up to handle digital toll payments from Saturday. It has equipped all the 365 toll plazas across all the National Highways with point of sale (PoS) machines so that the people can pay the toll fee using their debit or credit cards once the toll fee collection resumes from midnight of 2 December. The toll fee can also be paid using electronic wallets such as Paytm, MobiKwik and Freecharge, among others.

In addition, the government is also asking people to buy the radio frequency identification (RFID) based FASTags, which are pasted on the windshield of the vehicle to enable an automatic deduction of toll fee from the prepaid account linked to it at the toll plazas thereby doing away with the usual practice of stopping for cash transactions.

The roads ministry has also made arrangements for the sale of FASTags at select toll fee plazas and will also provide a discount of 10% on the toll fee for those who immediately make use of these tags.

The toll plazas would accept the old notes of Rs500 till the midnight of 15 December exclusively for cases wherein the toll fee exceeds Rs200.

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