Ministry of Economic Affairs released a press release on 8th Nov 2016 in order to withdraw Legal Tender Character of Old High Denominated bank Notes (OHD) ie; Rs. 500 &Rs. 1,000, given below are the brief highlights of the Press Release
♣ Why withdrawal?
- Restrict financing of Terrorism
- Curb the flow of Fake Indian Currency Notes
- Recovery of unaccounted wealth held in form of black money.
♣ What is the scheme?
- The legality of OHD i.e., Rs. 500 & Rs. 1,000 stands withdrawn from 9th Nov 2016 from 00:01
- The OHD are required to be either exchanged with banks (subject to 24,000/-) or deposited in the Bank Accounts on or before 30th December 2016
- The Consequence of the scheme is that the OHD notes cannot be used for transacting in the normal course of business except for certain exemptions (discussed later) , precisely :‑
1. Receipt from Customers cannot be accepted
2. Normal routine payments to vendors including the day to day household expenses cannot be made
- The OHD Notes will now be replaced by the RBI New High Denominated notes of Rs. 500 & Rs. 2000
♣ Operational guidelines to implement the scheme :
Exchange of OHD Bank Notes:-
- A person can exchange OHD Bank Notes only upto a maximum of Rs. 4,000/upto 30th Dec 2016 by filing a requisition slip (Refer Annexure 1) , however the limit of 4,000/- may be changed by RBI after 22nd Nov 2016 Interestingly it is to be noted that in the said notification issued the limit of Rs. 4,000/- is unclear whether it is per day or in total , however given the fact that with a valid identity proof any person can exchange OHD bank notes the limit can be said to be on a per day basis .
- The OHD Bank notes can be exchanged in any bank branch whether you hold an account with such bank or not provided a valid identity proof is submitted.
- If the value of exchange is more than Rs. 4,000/- , the balance over and above Rs. 4,000/- will be credited to the respective bank Accounts
Ex: MSD wants to exchange Rs. 44,000/- OHD Bank notes then the bank will give cash for Rs. 4,000/- and balance Rs. 40,000/- will be deposited to MSD’s bank account.
Deposit of OHD Bank Notes:-
- No limit on the quantity or value of OHD Bank notes that can be deposited in an account is prescribed whereby a person can even deposit `100crores or more in his account provided the source for the said deposits of OHD Bank notes are established by the person.
Note: Under Indian Income Tax Act 1961 , if a person is unable to substantiate the source for the cash deposited in their bank accounts then the same will be consider as income of the person and :-
– No deduction for any expenses will be allowed against such income
– the same will be taxed @ 30% u/s 115BBE
– Penalty u/s 271(1)(c) upto 300% of the tax evaded
- Deposits exceeding Rs. 50,000/- requires quoting of the PAN mandatorily.
- The OHD Bank notes can also be deposited in third party account provided specific authorisation is received from the Third party and the same is presented to the bank.
Withdrawal of OHD Bank Notes :-
- Cash withdrawal from the bank account over the counter is restricted to Rs. 10,000/- per day subject to an overall limit of Rs.20,000/- in a week upto 24th Nov, 2016 ie; A maximum of Rs. 40,000/- can be withdrawn over the counter from the bank upto 24th Nov, 2016 in 4 equal instalments
Ø In addition to above a person can withdraw from ATMs upto a maximum of Rs. 2,000/- per card per day upto 18th Nov, 2016 , the limit will be raised to Rs. 4000/- from 19th Nov 2016.
In total a maximum of ,
Upto 18th Nov 2016 Rs. 16,000/- (2,000*8)
From 19th Nov to 30th Dec 2016 Rs. 1,68,000/- (4,000*42(after holidays))
- How much time do I have to exchange the notes?
Ø The scheme closes on 30th December 2016
Ø However were OHD Bank notesare not exchanged / deposited on or before 30th Dec, 2016 for any reason, the same can be exchanged / deposited along with necessary documentation as may be specified by the Reserve Bank of India in the RBI Offices.
- What are valid proofs of identity specified above?
Aadhaar Card, Driving License, Voter ID Card, Pass Port, NREGA Card, PAN Card, and other Identity Card Issued by Government Department.
- General:
Ø The exchange facility is available at all Issue Offices of RBI and branches of commercial banks/Regional Rural Banks/Urban Cooperative Banks /State Co-op banks or at any Head Post Office or Sub-Post Office.
Ø In case personal visit of the account holder is not feasible then any representative of the account holder with the written authorisation from the account holder can deposit / withdraw /exchange cash.
Ø In the following cases exceptions have been given to accept OHD Bank notes till Midnight of 11th Nov, 2016 to avoid public inconvenience:
• Government Hospitals and pharmacies in these hospitals
• Railway ticketing counters
• Ticket counters of Government/Public Sector Undertaking buses and airline ticketing counters at airports
• For purchases at consumer co-operative societies, at milk booths, at crematoria/burial grounds, at petrol/diesel/gas stations of Public Sector Oil Marketing Companies.
Various Indian & International organisations have estimated the size of unaccounted money close to 23% of the India’s GDP which increases the inflationary levels and brings more poverty.Through various measures to curb black money the government is trying to bring more money in the banking channels, whereby liquidity levels of Banks rises which invariably increases the lending power of banks to various business organisations and generate more employment& income generating opportunities. With the current move along with given fact of irrational business mind-sets and democratic public , the time frame provided to restrict the flow of such currencies looks highly difficult.
Change is Hard at the First, Messy in the Middle, Gorgeous at the End !!!
Annexure 1
Request Slip for exchange of Old Bank Notes in denominations of Rs. 500/- and Rs. 1000/-
| Name of the Bank | |||
| Branch: | |||
| Name of the Tenderer (In capital Letters) | |||
| Identity Proof Original to be shown at the counter (Tick the one applicable) | |||
| Identification Number (Number mentioned in the Identity Proof submitted) | |||
| Details of Old High Denomination Bank Notes submitted for exchange | Denomination | No of Pieces | Value |
| Rs. 500 | |||
| Rs. 1000 | |||
| TOTAL | |||
| Total value in words: | |||
| Signature of Tenderer |
|
||
| Place:
Date: |
|||
Author Bio
Sir i have 60 lacs rupees in form of 500 and 1000 rs as cash gifted on occasion of my marriage dated 04 December 2015. This cash gifted by my mother in law with love and affection. Can i deposit into bank? Is it legally?