Important points you should know about the current demonetization drive

Being in the accounting and finance profession, in last few days – I have received numerous questions from customers as well as friends and relatives about the recent currency ban on old 500 Rs. & 1000 Rs. notes. 

I have given below few important tips in this regard that one has to keep in his mind :

Exchange old currency

Old High Denomination Bank Notes of aggregate value of Rs.4,500/- only or below held by a person can be exchanged by him/her at any bank branch provided a Requisition Slip as per format to be specified by RBI is presented with proof of identity. This can be done anytime till 30 December 2016. Similar facilities will also be made available in Post Offices. Several banks are restricting this exchange only to their account holders, but I am not aware of any such notification from RBI to that effect. 

Cash withdrawals – New currency

Cash withdrawal from a bank account, over the counter will be restricted to an overall limit of Rs 24,000/- in a week for the first fortnight, i.e., until the end of business hours on November 24, 2016. The limit of Rs. 10,000/- on bank withdrawal in a day has been removed recently

Withdrawal from ATMs would be restricted to Rs.2,500 per day per card up to November 18, 2016. The limit will be raised to Rs.4,500 per day per card from November 19, 2016 onwards. 

Cash Deposits

Old High Denomination Bank Notes may be deposited by individuals/persons into their bank accounts and/or exchanged in bank branches till the close of business hours on 30th December, 2016. This date can be extended further if found necessary, but there is no clear communication about this yet from RBI. 

All cash deposits of more than Rs 2.5 lakh in a single account made during the period from 10th November 2016 till 30 December 2016 will be reported to the tax department by banks. It will then be matched with the depositor’s income tax returns and suitable action taken.

In case of large cash deposits of more than Rs.10 lakh that are not explained by the income declared in the income tax returns, it will be treated as tax evasion and the tax amount plus a penalty of 200% of the tax payable would be levied.

Finance Minister Arun Jaitley on Thursday said the administration will not bother to make enquiry into smaller deposits i.e deposits amounting to less than Rs 2.5 lakh made in a single account during the period from 10th November 2016 till 30 December 2016 by way of single transaction or multiple transactions and nobody would be harassed over such smaller deposits. 

I hope this information is of help to you. Any comment or feedback is welcome.

Mrs. Shalaka Joshi

Founder & Director

Electronica Finsmart Solutions Pvt. Ltd.

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