Everyone was left in bewilderment when Prime Minister Narendra Modi made a statement on Tuesday i.e. on 8th November 2016 that the rupee 500 and 1000 note is going to be demonetized, which means it will no longer be a valid currency for the legal transactions taking place in the economy. New currency of 500 and 2000 rupees has been introduced in the entire nation.
This move has been taken in order to eradicate the black money from the entire monetary system of the country. Some important institutions such as government hospitals, chemists, petrol pumps, milk booths, Indian railways, government bus service, airports and government operated retail units can accept the old currency for few more days.
After the announcement on 8th November banks remained closed the next day and ATMs were shut down for the next two days.
Let Us See How Major Impact This Decision Will Have on the Economy and Its People
- The government is giving time duration of 50 days in total i.e. till 30th December 2016 to exchange or deposit the old currency. The old currency can be exchanged at the post office counter or at banks by filling a form issued by Reserve Bank Of India where one has to mention the denomination of old currency and the total amount. If anyone wants to exchange the currency then they should have a valid id proof as mentioned in the form. If one wants to deposit the money then they can do so in their respective bank accounts easily without any hassles.
- Those citizens who will not be able to deposit or exchange their old currency notes can get them exchanged on the centers run by Reserve Bank of India by 31st march 2017 by showing their valid id proof and giving a declaration for the same.
- From 18th November 2016 you can exchange the old currency for a value of rupees 2000 only. An individual can withdraw up to rupees 24,000 rupees from their bank accounts within a week and farmers can withdraw 25,000 rupees in a week from their accounts. A latest announcement stated that families that have wedding issue can withdraw up to 2.5 lakhs per wedding by submitting their KYC details. You can withdraw 2,500 rupees from your ATM in a single day.
- There is no tax-ability issue if you are depositing an amount up to rupees 2, 50,000 in your bank account till 30th But if the deposits in your bank account exceed this limit in 50 days then you can be in a big trouble and be ready to answer the income tax authorities as banks are instructed to send the details to income tax department if the deposits of a person exceed rupees 2, 50,000.
- Many economists are stating that it will be a big trouble for the common man as they will have to wait for hours in the queue, and the economy will come to a stand still for some days as the new currency will take time to circulate in the market. Poor people will face a lot of problems who don’t have a valid id proof and even a bank account.
- Even if anyone wishes to buy gold with the old currency lying at home then be prepared to pay substantial high rates and you will be under the scrutiny of income tax department as government is asking for CCTV footage from the jewelers and also one will need a pan card if the limit is crossing rupees 2 lakhs.
Small traders will face problems as they deal in cash, electronic payments will boost up and property price will fall down as real estate market is mostly cash based.