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CA Saurav Somani

Cleaning the Currency

A Surprising Swachh Bharat Abhiyaan!!

Intriguing, Ingenious, Incredible!

“So once again, Prime Minister Modiji makes his “Modi-fying Miracle Move”!” Subodh, a businessman, said to his friend CA. Kushal.

“Well, who in their wildest dreams would’ve thought that “Swach Bharat Abhiyaan” could even extend its broom to clean up the money at such a macro-economic level?” Kushal wondered.

“But can this demonetization really dust off the weeds?” Subodh sounded hesitant.

“Of course! That’s so obvious –

“Oh, you’d say the same: economic benefits, boosting the banks and so on! I’d really appreciate tangible evidence and not mere hollow words! What I know is that it’s causing chaos to common people like us: the lack of Rs 500 and Rs 1000 notes is just like – water-water everywhere, not a drop to drink!”


Kushal laughed and said, “Successful reforms comes with small sacrifices! Let’s look at the Bigger Benefits from a different but simple angle.”

Kushal resumed, “What if I tell you that you can enjoy your bank loans from now onwards?”

Subodh looked confused, “Enjoy your bank loans?”

Kushal replied, “As per economical statistics, India has in its kitty, estimated unaccounted money to the shocking tune of Rs 4500 billion! Thanks to this clean-up drive, a significant portion will be pumped into the banking system. That’s a huge boost to the banks and eventually will decrease the lending rates!”

“Oh yeah…” Subodh nodded.

“And what’s more,” Kushal continued, “A large population is still an “Unbanked Sector” despite the Jan-dhan-Yojana scheme. Now those people have no option but to open their bank accounts. It will inculcate banking and saving habits among them.  A huge number of people will come not only under the brackets of banks but also under the umbrella of taxation – particularly the Income taxes!

“So, this “Modi” Move is not just a modifier but also a marvellous Multiplier!” Subodh suggested.

“Precisely,” Kushal agreed, “India’s GDP is expected to be around 9% by F.Y 2018-19 on account of such massive money drive!

“But so many limits have been imposed.” Subodh said, “Like withdrawal limits: 10000 a day subject to weekly limit of Rs 20000 and so on. And if your deposits exceed Rs 250000, The Income Tax Department will hunt you like a blood hound!”

“Not necessarily,” Kushal chuckled, “if you are a regular tax payer, your occupation is genuine and fully accounted for; there isn’t anything to worry about. Moreover, Rumours are ripe that depositing more than Rs 250000 will attract penalty to the tune of 200% on deposits! Nothing could have been so funnier and ridiculous! That’s a rubbish rumour. Penalty can only be levied on concealed income and not on deposits! Of course, there are withdrawal limits but these will go on for few days.”

“Rs 1000 old notes should have been replaced by Rs 1000 new notes. Why the need for Rs 2000 notes?” Subodh queried.

“That’s a good question with a simple answer,” Kushal said, “Suppose you have unaccounted money of old Rs 1000 notes, famously known as “Black Money”. You deposit Rs 1000 old notes in your bank and withdraw the new Rs 1000 notes. Now, it might happen that you have more old notes of Rs 1000. So you might deposit the old once again. But you will treat it as if you are depositing the new Rs 1000 notes which you had withdrawn in the first case! You will withdraw it again and continue depositing the old ones but treating as if your bank account is being credited with the new ones! In this process, your whole bucket of black money will be converted to white without any one realising! This you cannot do with the new Rs 2000 notes.”

“That’s a very ingenious move by the government!” Subodh exclaimed.

“But there’s another reason, though an economical one,” Kushal continued, “The cost of printing Rs 1000 notes averages about Rs 3 per note as per RBI. By the end of March 2016, the reports stated that Indian economy had 6.7 billion or say 7 billion ‘Rs 1000’ notes in circulation. Now these 7 billion notes of Rs 1000 have scraped in seconds! The cost of printing another 7 billion 1000 notes at one stretch to maintain the circulation in economy will be exorbitantly expensive for the Government. But with Rs 2000 denomination just half quantity is required to print. Of course, the overall cost of printing Rs 2000 and Rs 500 notes would be a whooping amount of thousand millions! But it’s still economical!”

“Yeah, that’s economical but still sounds expensive…” Subodh said, “And speaking of new notes, you can’t help but be dismayed and disappointed by the design and quality of these notes: they are razor thin, prone to get torn and soiled, unlike the old ones which were crispy and solid.”

“Ah…well, I was dismayed, too, just like you.” Kushal responded with a shrewd smile, “But as I pondered over, a peculiar explanation struck me. The reason behind the thin notes, in my opinion, is a deliberate one; it may sound far-fetched but still deliberately excellent one.”

“Fire on,” Subodh urged eagerly.

Kushal resumed, “You see, the currency notes of lower denomination like Rs 5, 10 and Rs 20 are razor thin. Think carefully:  these notes, if kept too long at one place, get soiled, dirty and thus, needs replacing. The idea behind the thin new Rs 500 and Rs 2000 notes is to reduce their durability and longevity which would very well ensure that these are not kept at the same place for so long and keeps on rotating, circulating and renewing in the market!

 People were known to keep their black money in the form of old 500 and 1000 notes buried underground or stacked inside cemented walls and so on. The new notes, if treated with such callousness, would get mutilated.”

“That’s incredible!” Subodh quipped.

Kushal took deep breath and concluded, “On an overall perspective, the positive effects are bound to multiply exponentially. Of late such proactive and epoch-making steps like Income Declaration Scheme, Law on Black Money and Foreign Assets have been positively impactful in making a better India. Now this Demonetisation scheme will pave the way towards a never-before-seen powerful India. Furthermore, we can expect more of such schemes to come forth and clean the harmful corrosion glued to our nation. We are, after all, spearheading towards a cashless, corruption-less and clean economy and the broom of Swachh Bharat Abhiyaan has to be swept in every sector of India.”

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Author Bio

Saurav Somani is a Chartered Accountant by profession and a Writer from heart. When he is not busy putting his pen to audit report, he is in the throes of penning down his thoughts. Columnist for the leading English Daily “The Assam Tribune” since 2014, he has authored several books till date. View Full Profile

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  1. S. Muhammad says:

    This is regarding the mention of repeated deposit of 1000 rupees in the sentence, “But you will treat it as if you are depositing the new Rs 1000 notes which you had withdrawn in the first case!”.

    This argument has been seen elsewhere also and to me it looks rather specious. Ultimately, all deposits made by this individual (definitely identified by some ID or account no:), whether on the same day or on different days, will be traced as deposited by him, regardless of how he describes each day’s deposits. That can happen even if he does not withdraw his deposit in the new currency of Rs 2000.

    I cannot see how this contention adds up eventually.

  2. CA Saurav Somani says:

    Dear Sir,

    You are merely recovering from your clients against past years dues- bad debts recovered. If you can trace these amounts satisfactorily to past years bills/dues…service tax won’t get attracted. But yes…bad debts recovered is subject to income tax subject to some conditions.

  3. Sushil says:

    Dear Sir
    This is very goid drive to curb Blackmoney. But I Want to know some clarification . I am architect by profession . I was doing Professional practice My income Was not More than 10 Lac . So i am not covered under Service tax . But unfortunatly my full fee was not paying by my clients . Now Suddenly people Started paying my due from last Three years . I am now wondering My Income collection will be More Than 15 lacs . My worry is that .If i deposit this amount into Bank . How i will justify my profrssional income . Because i was not keeping any records . Peoples are paying only by cash not by Cheque. I am small peofessional practice . For me this is huge income . Now what should i do ? Please suggest me

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April 2024