Finance Minister Arun Jaitley on Wednesday said deposits of now-defunct old Rs 500 and Rs 1,000 currency notes in bank accounts will not enjoy immunity from tax and the land of law will apply on source of such money.
Highlights of press conference by Finance Minister Arun Jaitley on PM Modi's crackdown on black money and on withdrawal of higher denomination currency-
# Today the high denomination notes account for 86%, which had a huge role in black money, terrorism and counterfeit activities.
# There would be a sense of satisfaction for honest people.
# Old notes valid for toll plazas, govt and private pharmacies, LPG cylinder, railway catering, ASI monuments tickets for 72 hrs.
# Activities of Black Money economy has been affecting national economy.
# New series of banknotes of Rs 500 and Rs 2000 will be available at banks and post offices from tomorrow (Thursday).
# There can't be any comparison between demonetisation in 1978 and today because economy wasn't this big then.
# Government and revenue department are monitoring the situation, reports are very exaggerated and those indulging in this running high risk: FM on money conversion
# Tax collection in medium term will increase; bank deposits will also rise.
# This one decision will change the course of the way people spend and keep their money.
# It is huge step towards cashless economy
# This decision is of significant advantage to the economy, State will also benefit from this.
# Long-term benefits so significant; please bear short-term inconveniences; will try best to minimize them.
# Setback to parallel black money economy because a lot of currency operating outside system will now have to get in to banking system.
# There might a little inconvenience in replacement, to minimise that Govt took decision to give a window of 72 hours to people.
# Cancellation of legal tender of Rs 500/1000 was long overdue. It curbs counterfeit and Black Money.
# Government focused on tackling Black Money; steps taken to track 'Benami' transactions
# Demonetisation is not a permanent solution.
# The demonetization will not only nudge, but also push, the economy in the direction of a cashless economy.
# Govt's decision to demonetize 500 and 1000 rs currency notes has been welcomed by all.
# A number of steps have been taken to curb the menace of black money, to track 'benami' transactions.
# Since our Govt has come to power, we have taken a number of measures to embolden our economy.
# Cancellation of legal tender of Rs 500/1000 was long overdue. It curbs counterfeit and black money. Only holders of crime money will suffer.
# Since our Govt has come to power, we have taken a number of measures to embolden our economy
A day after the government announced the withdrawal of Rs 500 and Rs 1,000 banknotes in the country’s biggest crack down against black money, corruption and counterfeit currency, Jaitley said old higher-denomination currency notes have to be deposited in bank accounts to get newer or smaller denomination currencies.
“But it should be clear that it is no immunity scheme. This (deposit) does not provide any relief from taxation. The law of land will apply (on source of fund),” he said.
“If the money is legitimate which had been previously withdrawn from bank or earned legally and saved and had been disclosed, there is nothing to worry about,” Jaitley said.
But if it is illegal money, source will have to be disclosed and if it is a crime money, or bribe money, then it is trouble, he told DD News.
The Finance Minister further said that housewives and farmers with genuine savings need not worry about depositing cash in their bank accounts.
“The small amounts that people will deposit like Rs 25,000, 30,000 or 50,000 lying in house for expenses, whatever money could be there for meeting normal family expenses they need not worry. They can go to banks,” he said.
The Finance Minister said for first one or two weeks replacements may be less but after 2-3 weeks as more currency notes come in market then normal replacement will be available.
The move would help make more and more transactions become digital, he said, adding now people will disclose income and pay taxes. “India will become a more tax compliant society.”
Jaitley said that people who have accumulated black money, crime money or bribe would suffer after this.
“There is a premium now that this decision has created on honesty and dis-premium on dishonesty,” he added.
“Obviously there are some inconvenience for a couple of days or couple of weeks but those inconvenience cannot be alibi that India continues to live (with black money and parallel economy),” he said.
The decision would bring more transactions under tax net and both direct and indirect taxes would move up. Reduction in parallel economy would increase the size of formal economy, Jaitley said.
Stating that the decision would have its ramifications on politics as well, Jaitley said some political funding has started by cheques and if this step can do some cleansing, it would be a great move.
(With PTI inputs)