No tax immunity for deposits of old Rs 500, Rs 1000 notes in banks: Arun Jaitley

The Finance Minister further said that housewives and farmers with genuine savings need not worry about depositing cash in their bank accounts.

By: PTI | New Delhi | Updated: November 9, 2016 4:38 pm
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Finance Minister Arun Jaitley on Wednesday said deposits of now-defunct old Rs 500 and Rs 1,000 currency notes in bank accounts will not enjoy immunity from tax and the land of law will apply on source of such money. A day after the government announced the withdrawal of Rs 500 and Rs 1,000 banknotes in the country’s biggest crack down against black money, corruption and counterfeit currency, Jaitley said old higher-denomination currency notes have to be deposited in bank accounts to get newer or smaller denomination currencies.

WATCH VIDEO: Rs 500 & Rs 1000 Illegal: Scuffle At An ATM With People Queuing Up To Withdraw Money

“But it should be clear that it is no immunity scheme. This (deposit) does not provide any relief from taxation. The law of land will apply (on source of fund),” he said. “If the money is legitimate which had been previously withdrawn from bank or earned legally and saved and had been disclosed, there is nothing to worry about,” Jaitley said.

But if it is illegal money, source will have to be disclosed and if it is a crime money, or bribe money, then it is trouble, he told DD News. The Finance Minister further said that housewives and farmers with genuine savings need not worry about depositing cash in their bank accounts.

“The small amounts that people will deposit like Rs 25,000, 30,000 or 50,000 lying in house for expenses, whatever money could be there for meeting normal family expenses they need not worry. They can go to banks,” he said. The Finance Minister said for first one or two weeks replacements may be less but after 2-3 weeks as more currency notes come in market then normal replacement will be available.

WATCH: Government Says New Currency Notes In ATMs From November 11

The move would help make more and more transactions become digital, he said, adding now people will disclose income and pay taxes. “India will become a more tax compliant society.” Jaitley said that people who have accumulated black money, crime money or bribe would suffer after this. “There is a premium now that this decision has created on honesty and dis-premium on dishonesty,” he added.

“Obviously there are some inconvenience for a couple of days or couple of weeks but those inconvenience cannot be alibi that India continues to live (with black money and parallel economy),” he said. The decision would bring more transactions under tax net and both direct and indirect taxes would move up. Reduction in parallel economy would increase the size of formal economy, Jaitley said.

Stating that the decision would have its ramifications on politics as well, Jaitley said some political funding has started by cheques and if this step can do some cleansing, it would be a great move.

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  1. H
    Nov 9, 2016 at 12:59 pm
    Such a cool move to fix the balance sheets of banks, isn't it? The government easily gets away with loan waivers for Soot-boot and earns a name for putting a curb on black money. That's a different thing that most of India's black money is in real estate, gold or foreign currencies in foreign banks. And that's also a different thing that the 2k rupees notes are still susceptible to the same abuse.
    1. M
      Nov 10, 2016 at 4:40 am
      This surgical strike is like a cancer treatment drug which is likely to find its target without harming the healthy cells!lt;br/gt;lt;br/gt;Very innovative idea indeed! Crooks can't open their mouth nor they can cry! All they can do for time being is to fire the shots from other people's shoulder for time being then fall quiet!
      1. R
        Nov 9, 2016 at 11:46 am
        No worries Jaitley ji, the so called defunct 500/1000 notes will be distributed by all political parties incl your party to Electorate who will exchange the notes with Banks say 25/50k per person, number of electorate is huge, all black money will become white. What a great idea from the PM. congrats for the ban which really helps political parties in the ensuing UP elections especially BJP.
        1. A
          Nov 10, 2016 at 3:39 am
          good move, but a limit of Rs 2.5 lakh is on higher side, considering bribe/ill gotten wealth. also in our country IT exempt limit is rs 2.5 lakh. Going rationally this limit should be lowered to Rs 50,000- 1 lakh
          1. Virendra Sason
            Nov 9, 2016 at 11:37 am
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