At 8 p.m. on November 8, 2016, Prime Minister Mr. Narendra Modi announced that the Rs. 500 and Rs. 1000 notes shall not be a legal tender from the midnight of November 8, 2016. Also, he announced the introduction of new Rs. 500 and Rs. 2000 denomination notes. PM has repeated history of demonetisation. Not only in India in rest of the world his action has been categorized as the bold & deserving step. It is possible that more countries can follow his line of action. In the year 1978 (on 16th January, 1978), Morarji Desai government had announced the ban on the legal tender of the high denomination notes of Rs. 1000, 5000 and 10000. At that time, Mr. IG Patel was the RBI Governor and currently, Mr. Urjit Patel is the RBI Governor.
The Supreme Court will hear pleas on demonetisation on December 2, 2016 including the transfer petition filed by the GoI on the withdrawal of old high denomination notes(OHD) as well as the constitutional validity of the notification on the demonetisation.
Earlier, in order to strengthen the existing laws relating to black money, the GoI had constituted a Committee under the Chairman, CBDT to examine the measures to strengthen the existing legal and administrative framework to deal with the menace of generation of black money through illegal means including, inter alia:
a) Declaring wealth generated illegally as national asset;
b) Enacting / amending laws to confiscate and recover such assets; and
c) Providing for exemplary punishment against its perpetrators.
The Committee had submitted its report to the GoI on 29.03.12. The report had been sent to different Ministries / Organisations and State Governments for necessary action.
The Income Tax Act, 1961 and IT Rules, 1962, also contain measures to check black money.
The recent, CBDT Notification No. 104/2016 dated 15th November, 2016 mentions that in exercise of the powers conferred by section 285BA, read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-
1. (1) These rules may be called the Income–tax (30th Amendment) Rules, 2016.
(2) They shall come into force from the date of their publication in the Official Gazette.
2. In the Income-tax Rules, 1962 (hereinafter referred to as the said rules), in rule 114B, in the Table, for serial number 10 and entries relating thereto the following serial number and entries shall be substituted, namely:-
|Sl. No.||Nature of transaction||Value of transaction|
|“10.||Deposit with,- |
(i) a banking company or a co-
(ii) Post Office.
|Cash deposits,- |
(i) exceeding fifty thousand rupees during any one day; or
(ii) aggregating to more than two lakh fifty thousand rupees during the period 09th November, 2016 to 30th December, 2016.”.
3. In the said rules, in rule 114E, ̶
(i) in sub-rule (2), in the Table, after serial number 11 and entries relating thereto the following serial number and entries shall be inserted, namely:-
|Sl. No.||Nature and value of transaction||Class of person (reporting person)|
Cash deposits during the period 09th November, 2016 to 30th December, 2016 aggregating to ̶
(i) twelve lakh fifty thousand rupees or more, in one or more current account of a person; or
(ii) two lakh fifty thousand rupees or more, in one or more accounts (other than a current account) of a person.
(i) A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act);
(ii) Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898).”;
(ii) in sub-rule (5), the following proviso shall be inserted, namely:-
“Provided the statement of financial transaction in respect of the transactions listed at serial number (12) in the Table under sub-rule (2), shall be furnished on or before the 31st day of January, 2017.”.
PM has announced to check Benami Transactions effectively.
The Prohibition of Benami Property Transactions Act, 1988 as amended by Benami Transactions (Prohibition) Amendment Act, 2016 coupled with Prohibition of Benami Property Transaction Rules, 2016 with effect from 1-11-2016, shall work effectively in this line.
Transactions in share market, real estate & in cash have come within reach of scrutiny of government and it appears that another Gold Control Act is in the offing.