Mr Arun Jaitley on Wednesday announced that deposits of old notes of Rs 500 and Rs 1000 will not going to have the benefits of tax and whatever the tax deduction will be charged on the amount as per the current laws.
He said the transformation of small denomination currency from higher denomination currency will help the country to fight from corruption and black money.
“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),” Jaitley said.
He further added if the money is legitimate which is once withdrawn from the bank for some use and been disclosed in the bank statements then it would not be an issue.
However, if the money is undeclared or crime money then the trouble is there for the people who have accumulated black money and crime money.
People with genuine savings like farmers and housewives should not worry about tax and feel free to deposit the amount in their respective accounts.
This decision will support the memorandum of Digital India and citizens have to disclose the income anyhow and thus tax would be levied.
“There is a premium now that this decision has created on honesty and dis-premium on dishonesty,” he added.
He too agreed on the inconvenience to the people in the initial days of this move, as the result is quite worth of the pain.
Now we can see more transparency under the tax umbrella for both direct and indirect tax. The diameter of formal economy would increase with the shrinking size of parallel economy.
The move would be great if it helps to counter the political funding as well. We are crossing our fingers to see more on this move.
Image Credit: TheIndianExpress
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