Prime Minister Narendra Modi has called Cabinet meeting tonight, possibly to discuss the penal 200 per cent tax that is keeping away the scrapped 500 and 1000 rupees notes from entering the formal system. The meeting, summoned at a very short notice, comes amid reports of high tax penalty terrifying people from putting their cash savings into the formal banking system. Sources said the government wants all of the 500 and 1000 banknotes to be deposited and not burnt or destroyed for the fear of penal action.
WATCH VIDEO: Finance Minister Arun Jaitley Slams Opposition Over Demonetisation
The Income Tax Department had previously warned that cash deposits above Rs 2.5 lakh threshold post demonetisation decision could attract tax plus a 200 per cent penalty in case of income mismatch. It was stated that the department was tracking all cash deposited during the period of November 10 to December 30, 2016, above a threshold of Rs 2.5 lakh in every account.
This had put a fear in people with reports of the banned currency even being destroyed. Sources said the government may come out with a deposit scheme or an instrument like bond where the cash savings in the banned notes could be deposited.
The Opposition has been up in arms over the Prime Minister’s absence from the Parliament and demanded he must participate in the debate. Ghulam Nabi Azad, the leader of Opposition in Rajya Sabha, had said his party won’t allow the House to function if the Prime Minister skipped the discussion. Reacting to Opposition’s obstinate resolve to disrupt Parliament proceedings since the past few days, Union Finance Minister Arun Jaitley said they are inventing reasons for running away from debate, adding that the Opposition is not keen on debating the issue. His comment triggered an uproar in the House and Opposition MPs began to chant: “Pradhan Mantri bhagh gaya“.
Jaitley also countered former Prime Minister Manmohan Singh’s statement in the Rajya Sabha on demonetisation that termed the Centre’s move to scrap old high denomination notes as a “monumental mismanagement”. He said the move will have positive impact in medium and long term. Speaking in the Rajya Sabha today, Manmohan Singh had urged PM Modi to find “pragmatic ways” to alleviate the sufferings of the people.
He said the 50 days time sought by the prime minister for things to normalise could have a detrimental effect on the poor section in the society. “The way this is being implemented, it will hurt farmers, small traders and those in the informal sector. The GDP of the country can decline by 2 per cent. I feel that the PM must come with some constructive proposal on how we can implement this scheme,” he said.
Saying that he doesn’t disagree with PM Modi’s decision to root out black money from the system, Singh warned the Centre that the alleged deaths due to demonetisation can weaken public’s confidence in the currency and banking system. “60-65 people have lost their lives, what has been done can weaken our people’s confidence in currency and banking system,” Singh said. He asked PM Modi, who was present in the House, whether he could name any country where people have deposited their money but are not able to withdraw it. With the Finance Ministry introducing new norms everyday, Singh said that it wouldn’t reflect well on PM Modi and it exposed RBI’s poor planning.