PMO has shocked the world by discontinuing the Rs 500 & Rs 1000 notes and introducing the new Rs 500 & Rs 2000 notes. Now here’s my point of view. First, this is primarily going to hit the offline businesses and people who do business with 90% of them have been escaping from taxes because of this while online businesses, freelancers have always been under the tax radar.
How does this solve the Black Money Problem? With the introduction of these new notes, everyone will have to go to a bank and exchange it & to exchange it they will have to have that money in their balance sheets which they probably have been hiding from years since they were always into cash business. Every rupee will be accountable and since their piles of cash stacked would become unusable from December 31st they will have to either show it in their files and pay taxes or else just destroy it. Of course, it’s not a 100% solution but a great solution for the big problem, now only if PMO would reduce the tax rates for everyone that would push more people to disclose their revenues. Also, make a note that this change will boost the online businesses revenues since people would prefer buying online and ensure everything is accounted easily. There might be a panic in the coming weeks but that should settle down since its a 2 months time frame that might be extended too and this would at least ensure that the majority of the local stores, shops, and business who have been evading taxes will all start paying taxes.
Rumours that RBI is launching Rs. 2000 notes soon. New Rs. 2000 notes may not have Mahatma Gandhiji on it. Via Whatsapp. Any sources? pic.twitter.com/Jy6kFcSKrs
— ? ? ? ? (@amitbhawani) November 6, 2016
Do make a note that the new notes would take a good amount of time to be available at the ATM’s and also at the banks but the bigger problem would be the huge amount of cash that would be exchanged at the banks. You should probably take some time and then also meet your auditor or accountant for a professional advice on the cash you have and how you could exchange it. I have already seen a few people on WhatsApp have been suggesting black markets to get their money exchanged at a commission but you should avoid this route too.
tl;dr (Multiple Sources & Tweets)
- New Rs 500 & Rs2000 Notes will be issued
- Rs 500, Rs 1000 notes discontinued from tonight
- Cashless fund transfer won’t be affected by this
- Govt hospitals will accept old Rs 500 and 1000 notes till 11 November midnight.
- Rs 20,000 weekly cap on exchange of Rs 500 & Rs 1,000 notes: PM
- Exchange available till 31st December
let me know what do you all think about this change and will this really effect you? Think about the larger picture and let me know if you think this is a good change that would bring equality among the online and offline businesses.
PS: I’m not a financial analyst or an expert on this domain but sharing a personal opinion on this new change that will create a big boost to the mobile wallets like Paytm.
Note: If you think any of my points are factually wrong, please comment below and will be updating the story.