BackCash deposit of old notes gets tougher as government brings in new rules
The new deposit rules come as a surprise as the government had earlier said that people should not rush to banks as enough time is available to deposit old notes
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New Delhi: The government on Monday put fresh restrictions on deposits of old Rs500 and Rs1,000 notes, announcing such deposits in excess of Rs5,000 will be accepted only once by 30 December, that too after the depositor satisfactorily explains the reason behind the delay in depositing the money.
The decision came as a surprise as the government had earlier said that people should not rush to banks as enough time is available to deposit old notes.
“The credit in such cases shall be afforded only after questioning tenderer, on record, in the presence of at least two officials of the bank, as to why this could not be deposited earlier and receiving a satisfactory explanation. The explanation should be kept on record to facilitate an audit trail at a later stage. An appropriate flag also should be raised in CBS (core banking solution) to that effect so that no more tenders are allowed," a notification by the Reserve Bank of India (RBI) said.
Even when tenders are smaller than Rs500, deposits are made in an account and such tenders taken together on cumulative basis exceed Rs5,000, they may be subject to the procedure to be followed in case of tenders above Rs5,000, with no more tenders being allowed thereafter until 30 December 2016, RBI said.
The account to which old currencies are deposited in excess of Rs5,000 should also be KYC (know your customer)-compliant accounts and if the accounts are not KYC-compliant, credits may be restricted up to Rs50,000 subject to the conditions governing the conduct of such accounts.
Congress chief spokesperson Randeep S. Surjewala said that the government has placed another hurdle in front of ordinary people who want to deposit their hard-earned money in banks.
“Bank will carry out an inquiry for deposit of over Rs5,000. Banks are meant to service the people, they aren’t police stations," he added.
The finance ministry clarified that there shall not be any limit on the quantity or value of the specified banknotes for deposits made under the Taxation and Investment Regime for the Pradhan Mantri Garib Kalyan Yojana.
Revenue secretary Hasmukh Adhia on Friday said that tax evaders can declare their unaccounted income till 31 March under the government’s new income disclosure scheme, the Pradhan Mantri Garib Kalyan Yojana.
Under the scheme, a declarant of undisclosed income needs to pay a tax of 30%, a penalty of 10% and a Pradhan Mantri Garib Kalyan Cess of 33% on the tax, all of which add up to around 50%.
In addition, the declarant will have to deposit 25% of the undisclosed income in the zero-interest Pradhan Mantri Garib Kalyan Deposit Scheme for four years. Part of the proceeds will be used for welfare schemes for the poor.
Unlike the earlier income declaration scheme, a tax evader will have to first pay the tax, put money in the deposit scheme and then make a declaration—either online or at an income tax office.
The finance ministry also directed the National Bank for Agriculture and Rural Development to conduct audit of the KYC documents of individuals or members of the primary agricultural credit societies that have deposited old Rs500 and Rs1,000 currency notes between 10 November and 14 November with district cooperative central bank before the Reserve Bank of India restricted them from dealing with such notes.
Vishwanath Nair in Mumbai contributed to this story.
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