In an unprecedented move, the Government of India has indeed played a trump card by hitting at so many targets by just one shot demonetizing the two most valued currency notes in India, viz Rs. 500 and Rs. 1000.
While nobody prevented any of the Governments in the past to do so to check various malpractices – financial, social, political or otherwise, yesterday’s move of Prime Minister Mr. Narendra Modi has pleasantly surprised most of the countrymen and shockingly surprised some of them. The announcement is unprecedented as it has never happened this way nor was expected at this point in time. It was kept top confidential and handled so efficiently that even media and most of people in Government, banks etc were left unaware.
While it is a very bold and positive step for the country as a whole, it may not auger well for some – for those whom it will be difficult to disclose or use this money any more. The announcement came around 8.30 PM and came into operation from midnight leaving just 200 minutes for people with such currency to use it. Yet, some people did managed that and purchased high value items, bullion & jewellery and even gift vouchers at branded stores. Great minds indeed !
The declaration of Rs. 500 and Rs. 1000 currency notes to be no longer ‘a legal tender’ will address many problems of the country, viz –
Overnight, all such problems have been addressed and dealt with boldly and heavily with tangible results in the offing.
From today, we will not have fake currency notes of these denominations, there will be no black money in the system to the extent of value of such currency, whole country get purified (even households) from such currency, entire lot of terrorist money comprising of these notes gets washed out and of no use and whatever money was kept as earned out of corrupt practices gets dumped. From today on, there may be no need to conduct searches or raids by income tax / other tax collectors, CBI, Anti-Corruption and other such bodies and there will be relatively free for other productive works. Even the corrupt officers and people will have to start earning afresh or stop such dealings. Not only this, from today, it will be known that they have earned by illegal means after 09.11.2016 in terms of fresh accumulations. The country’s political system will also get cleaned and the way elections are funded and political parties function will witness a sea change for good. Election Commission would be too happy on this.
On business / economy front, it may create a liquidity crunch in short term, besides adversely affecting business of hotels, real estate construction etc. It may also affect spending habits of people with easy money, e.g. luxury hotel & restaurant spends, liquor consumption, travel holidays and investment in real estate where part of consideration was cash component. The share market may also take a hit initially but will rebound. Bullion may be costlier due to being a preferred choice now.
With this, while the currency gets filtered, commercial transactions will also get addresses from 1st April 2016, when India migrates to GST as is most likely, unaccounted transactions may not be there or will get substantially reduced in GST regime.
All said and done, the step taken by Government ought to be appreciated, commended and propagated. If not for all individuals, there are going to be ‘good days’ at least for India as a whole.
Reaction Quote from Riaz Thingna, Director, Grant Thornton Advisory Private Limited said that “This is a very welcome move by the Government and is on cost with the Prime Minister’s promise to take steps to eradicate the menace of Black money. However, it would have been more effective if the effective date was 30-September-16, as it would have ensured greater success for the income disclosure scheme.
It may be worthwhile for the Government to consider a longer window for this scheme as this would go a long way in preventing unscrupulous methods to dilute the impact of this huge positive step.”
Do you think CBDT should extend Tax Audit Report and relevant ITR Due Date? Please Comment, Vote, Retweet and Like.— Tax Guru (@taxguru_in) September 18, 2018