The demonetization process in India has left everyone in a state of astonishment. Prime Minister Narendra Modi announced on Tuesday 8th November 2016 that the old 500 and 1000 rupee notes will no longer be a legal tender in the economy.
Time limit of 50 days has been given to exchange or deposit the old currency that is till 30th December 2016. There will be no income tax accountability if anyone deposits an amount up to rupees 2,50,000 till 30th December in their bank accounts but if the limit exceeds in this time period then there will be an enquiry for the extra money deposited. If a person will be guilty then he will be liable to pay tax as well as a penalty of 200 percent on the exceeding amount along with other legal procedures that will be levied against him.
This decision was mainly taken to curb the black money in the economy. So people are having sleepless nights that have stored old currency notes at their homes and other places and it is exceeding the limit of 2.5 lakhs.
Let Us See How It Will Impact Gold and Property In The Country
Gold prices have shot up because people are using their black money to exchange it for gold. Many retailers are selling gold to these people by taking old currency notes from them and giving gold at double rates. But now they can land in big trouble as government is asking for CCTV footage from the jewelers and now the customers are required to show pan card if the limit exceeds 2 lakhs.
- Jewelers will be accountable for the transactions during this entire period as income tax authorities are keeping a check and any unaccounted money in their accounts will be checked upon. If any shortcomings will be found then they can trace the person who actually bought the gold and can conduct inquiry. If anyone will be found guilty severe penalty will be imposed.
- A lot of jewelry shops are running out of their gold stock due to such a great demand and were even compelled to shut down their showrooms when they ran out of gold. Due to fear of scrutiny many jewelers are selling gold at authentic rates and are accepting cheques for payment.
- Property has also seen a big impact. Real estate is mostly cash based. People who are having surplus old currency notes are trying to exchange them with property deals. Many real estate builders have even started exploiting customers by asking for more money than the current rates because they say that they are ready to take old currency notes. But one should be aware that the government is keeping an eye on the transactions taking place in the bank accounts. So if a property dealer will deposit the money in his account and if he is caught then the person who purchased the property can be easily traced and penalized for his action.
- In the long run property rates will come down and gold price may also fall in the country because after the period of 50 days black money will be swiped away. Then only genuine buyers who are left with white money will be able to buy a house or gold because demand will come down. So genuine buyers who were thinking from a very long time for its purchase will get the benefits.