Rahul Chawla

Black money is money generated via tax evasion which is generally in cash and not traceable.

Actual demonetization process  :

Step 1 : Convert all the black money to white by charging people a specific rate of tax, and depositing all of it in banks. (Leads to huge deposits in banks)

Step 2 : Banning big currency notes of 500 and 1000 only leaving small currency notes.

Step 3 : Demolishing most of the taxes and implementing one tax that would be on bank transactions.

my-money-is-safe-from-tax-theft

Impacts :-

1. Only small notes would prevail in the economy which would lead to people not keeping huge amounts of cash as it would be practically difficult keeping such large amts of cash. High value tranactions in cash becomes impractical. (Tranactions through bank shall be charged to tax, leading to adequate funds for government. Daily amount of RTGS transaction in india is 2.5 lakh crores( on RBI’s site) imagine when cash pools up and tax is charged to it what the amount would be.)

2.  Most of the transactions taking place through bank, transactions are traceable unlike when done in cash.

3. Terrorists funding shall be easily stopped as they would either need big lots of cash or bank account (traceable) for transaction.

4. Fall in fake currency to a great extent as printing of small currency becomes non viable.

5. Great boost to GDP of economy.

6. Ease of taxation as maximum taxes are aboliahed leading to no tax evasion which further leads to stopping of generation of black money.

7. Corruption decreased by great extent as most transactions are via cash.

8. Great fall in rates of interest charged by banks to public.

9. Commodities, facilities become cheaper as taxes on them are abolished.

Actual scenario : Introduction of new currency notes corrupts the whole idea of abolishing black money. I agree to the fact that somewhere a good amount of black money will be destroyed in one stroke, but introduction of new notes would make generation and keeping of black money in future easy and handy, as people will keep making black money in same ways as they did earlier (Tax evasion, Bribes etc.)

Do not fool yourself by the idea that black money generation stops in future or completely abolished as people having them have enough measures to displace there money(not all but a good portion of it can be saved by every individual.)

If this theory is correct which being an average commerce student appears correct to me :

Q1. All efforts and problems faced by general public which they are willingly accepting to do, to see a better future are all waste?

Q2. What about the impact/damage on our economy which happens to stand kinda still due to non availability of cash in these days?

Disclaimer : I do not support any political party and all the above said views are only my personal opinions, general information and for a common man’s understanding also only true to best of my knowledge.

#involve in conversations not debates.

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21 responses to “My View on Ban on old currency note”

  1. Nem Singh says:

    ll know the truth but richest thinking is so poor they want put their money in beds only because they feel their money is secure in their custody.

  2. Suchita says:

    It would have been a fantastic step if it had long term impacts. Good portion of undeclared money is with the upper middle class people who have numbers of ways to preserve that again and of course in small area now. The actual black money which is hampering the country is hovering and not hoarded in any particular treasury. The government must play serious. By taking such an action it has proved again that Mr. Prime Minister’s acts are just like his talks, only to strike mind of common men but having no results………. .

  3. ARUN MITTAL says:

    i am on the same basic premise as the author Rahul Chawla.

    We are wanting to do away with Black Money. That is the idea. No ?

    We all know Black Money is that money which is generated by illegal means OR income which is generated by proper legal means and transactions but on which Tax is not paid. It is this latter Income that accounts for almost 80 -90 % Black Money. And it is this portion which needs to be tackled.

    If Govt is able to collect Tax on this income then, the Black Money is removed. Yes ?

    The present scheme is devoid of any tax collection except on some adventurous deposits in spite of the provision of applicable Tax + 200 % penalty, scrutiny harassment and impeding criminal proceedings leading to imprisonment. Hence, in this whole demonetization scheme and its plan, I don’t see that the Govt will collect worthwhile tax or revenue worth the effort. However of-course, huge amounts of currency will get redundant and get out of circulation but, no Tax revenue to the Govt.

    The Govt could have scored double. if it had made Bank Deposits softer and attractive by allowing tax on deposits at the current level or somewhat similar structure like (suggested):

    Deposits upto 2 Lac – No Tax
    2 – 5 Lac – 10 % Tax
    5 – 10 Lac – 20 % Tax
    More than 10 Lac – 30 % Tax

    I have no doubt this will lead to deluge of Tax revenue collection of unprecedented proportion, so much so the Govt would not be able to count it

    I think the Govt must have thought of it as well but , they may have decided not to do it because it would undermine its credibility of fairness due to just ended IDS Scheme with 45 % Tax on Voluntary Disclosures. In my opinion IDS itself was similarly unfair to those who had declared full income and paid tax earlier. So, it should not matter at all. Such things are known to be repeated in the past to meet the targets and increase Tax Collections as per the circumstances and this huge step of demonetization is a desperate measure and overrides any other issue.

    Consider the effects. if Tax is collected as suggested above, all the hoarded money comes into circulation. No Black money left. No parallel economy. Govt gets flush with funds. High investment by Govt in the stuck up and, new infrastructure projects. The Tax rate reduction will lead to disincentive to indulge in Black Money generation any further.

    The present scheme of demonetization is no guarantee to stop Black Money re-generation. And periodic Demonetization is neither possible nor the right way for a permanent solution to menace. The Only Permanent Way is to discourage its generation. This can be achieved only with Lower Tax Rate and better control. With computerization and inter departmental information access, large amount of loopholes can be plugged which, no doubt are being done already.

    So, Demonetization along with attractive Tax rate and no penalties on unrestricted amount of Bank Deposits is the only way and the right way to flush out the Hoarded Cash and generate windfall Tax collections leading to reduced Taxes in future and other multiple benefits is what I would propagate.

    Thanks

    Arun Mittal

  4. Pawan says:

    Very few people are ready to understand what you all people are trying to say. I cry for my fellow country men as they always misguided, if our PM would have said that this process is to clean out counterfeit I would have supported him whole heartedly. But again our ignorant country men are made to suffer and this whole process will come out as JUMLA. I really feel sad for our country men who never foresee what is coming and by the time they realize they are already befooled.

  5. Ashok Kumar says:

    I fully agree with the idea of PM but see this is the time of thousands & lacks of marriages in the country how they people will manage. In my opinion Our respected PM should do one thing, After full Verification about the marriages to be held they can withdraw their money from banks without any queue by prior permission by the branch manager. Another step Our PM can do for this verification that at the time of marriage one person or a team can visit the marriage venue to find out the actuality. So Plz find out a way……

  6. Subhendu says:

    I fully support the opinion of Rahulji,
    Allowing all black money to be deposited at the banks and charging special rate of Tax. It will have a tremendous effect in collection of revenue
    Secondly to implement transaction tax in place of all direct taxes. It will definitely fetch more revenue and shall decrease expenses for maintaining the present machinery for collection of revenue and also to diminish the litigation at different forums substantially.No question of collection of Tax -No question of generation of black money.

  7. ritesh says:

    sharad Pawar supports modi & even then if nothing rings any bell then, i should doubt my intelligence.

    I dont understand how this pm is going to ban black money with no action on Big corporates with 6 lakh crores NPA. Which can be recovered with acting obly on 6 big corporates. Instead he is ready to give trouble to whole nation.

    And introducing 2000 notes in name of curbing black money.

  8. PANKAJ SIBAL says:

    In my opinion, the whole exercise in without any proper planning, taking into advice of experts, in haste and to gain political mileage, the cost of demonetizing and printing new notes, logistics etc. are on records by any govt or media, its on the Exchequer. The hardship is being faced by poorest of poor, lower middle and middle class and upper middle class in spite of the fact they have paid their share of taxes honestly by VAT, Excise, Income Tax and what not??? The measures taken and shown by the govt for what they said, “Controlling of Corruption, black money, drugs, terrorism, etc etc if neither eradicated nor controlled, will Ho’nble PM take responsibility for mismanagement and chaos and resign?

    • Jatin Grover says:

      Cost of printing new notes of value 14.5 Lacs crore will be at max 500 crore (my estimate based on various links I have gone through) but as per various estimate this will result in indirect collection of Rs. 2.5 lacs crore by government. The expense incurred by government is much less if compared to administration cost incurred to collect income tax during a year of around 4 lacs crore.

      Apart from above yes I agree poor are suffering but that is only for 4-5 hours for one poor/middle class person.

      They have only white accounted money hence they can deposit whole amount at once which might take 4-5 hrs at max. This much pain can be born by a person because if anyone is ill in a family then all others are ready to do anything to get him/her cured. Now our mother nation is bleeding because of black money we can bear 4-5 hrs of pain.

    • Manmeet Mohanty says:

      Are You a Relative Of Kapil Shibal ? Why because like Kapil Shibal Opposing Every Move of present GOVT You are also opposing a good work. Previously when congress GOVT was there at that time where was your this IDEA.

      • Rahul chawla says:

        Sir, Not every person who opposes govt belongs to opposition party. You should keep a free mind to understand things first, i am not against the decision of demonetisation but what you dont understand is demonetisation is not completed if govt issues new 2000 notes. Doing such only makes it a note exchange scheme which corrupts the whole idea doing so and all the pains taken by us “the common people” are a waste.

        People are being told that demonetisation will stop corruption black money etc etc true i completely agree, but for that they shall follow the complete process.. i am not against demonetisation i am against issuing of new currency notes.

    • Brij says:

      Dear Pankaj, i do not agree with your view of hardship being faced by poor. This poor society has been facing this hardship for the last sixty years. They had to stand in que for everything be it ration, kerosine, pay their bills etc etc and so on. They had been facing this because of political rallies, VIP movement. Hence this little hardship is nothing. Even if you whitewash your house, your own house is disoriented for months, this is nation cleaning. Moreover you don’t need to stack cash in your house.

  9. lina says:

    This type of currency ban is without authority of law hence should not be sustainable
    First a act should be passed by parliament and assembly and then it can be banned
    There r thousands ways to withdraw black money and
    Prevent terror.

    • Sidharath says:

      Section 26 of the RBI Act, 1934 under which demonetization has taken place, empowers the Central Government to demonetize ( in layman terms ban) currency note of any denomination.
      Also, such demonetization in not unprecedented, as demonetization of 10,000, 5,000 and 1,000 notes took place in 1978 and it was in 2000 that 1,000 notes were again issued.

      • Rahul chawla says:

        Section 26 does not explain demonetisation, it only refers to seizure of old currency notes as legal tender. This is what we are trying to educate people about the results which govt is telling is that of demonetisation while the process which is made applicable is not demonetisation rather only exchange of notes. Aren’t the general people being fooled?

  10. lina says:

    This is a harsh n unbearable step .
    It is not possible in a democratic country
    First put the country under Marshall law and then such type of steps can be taken

    • Pawan says:

      But how to make country men understand that this decision / process is not democratic. Constitution has been torn into parts.
      The saddest thought JANTA PARTY was founded due to EMERGENCY by Indira Gandhi but what we will call this EMERGENCY, base of the JANTA PARTY has taken a set back by this undemocratic decision.

  11. Heshagirirao says:

    Demonetisation will have definitely some salutary effect. Circulation ohd notes from Pakistan comes to an end

    • Rahul chawla says:

      Only until they successfully duplicate the new currency notes, which might be difficult not impossible as the procedure of printing is universally open. But temporarily i agree, yes surely it will.

      • Pawan says:

        Duplicate work would have started by now, we say China is master in duplicates and in today situation we very well know Pakistan and China friendship saga, so we can understand well what is coming.

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