Black money - demonetization
Black money
However, according to a 2018 report from the RBI, approximately 99.3% of the demonetised banknotes, or ₹15.30 lakh crore of the ₹15.41 lakh crore that had been demonetised, were deposited with the banking system. The banknotes that were not deposited were only worth ₹10,720 crore.
Objectives and outcomes
The government said that the main objective of the exercise was curbing black money which included income which had not been reported and thus was untaxed; money gained through corruption, illegal goods sales and illegal activities such as human trafficking; and counterfeit currency. Other stated objectives included expanding the tax base and increasing the number of taxpayers; reducing the number of transactions carried out by cash; reducing the finances available to terrorists and radical groups such as Maoists and Naxalites; and integrating the formal and informal economies.[53][54][55][56][57]
Black money
The government estimated that ₹3 lakh crore, or approximately 20%, of the demonetised banknotes would be permanently removed from circulation.[58] However, according to a 2018 report from the RBI, approximately 99.3% of the demonetised banknotes, or ₹15.30 lakh crore of the ₹15.41 lakh crore that had been demonetised, were deposited with the banking system. The banknotes that were not deposited were only worth ₹10,720 crore.[12] Commentators concluded that the government failed in its aim of purging black money from the economy.[13]
Evasion
A jewellery store in a shopping mall with a notice "We accept ₹500 and ₹1,000 notes", even after they were no longer valid banknotes.
There were reports of people circumventing the restrictions imposed on exchange transactions by conducting multiple transactions at different bank branches, and by sending hired people, employees, and followers in groups to exchange large amounts of demonetized banknotes at banks.[59][60] In Gujarat, Delhi and many other major cities, sales of gold increased post-demonetization, surging the price as much as ₹45,000 (US$630) from the ruling price of ₹31,900 (US$450) per 10 grams (0.35 oz).[61][62] The Enforcement Directorate raided several forex establishments making backdated entries.[63] Money laundering using backdated accounting was carried out by co-operative banks,[64] jewellers,[65] sellers of mobile phones,[66] and several other businesses.[67]
The cash deposited into hundis (cash collection boxes in temples and gurudwaras) are exempted from inquiry by the tax department; this is sometimes to launder money.[68][69] After the demonetisation, there was a spike in donations in the form of the demonetised banknotes in temples.[70][71][72][73] People booked large number of railway tickets to dispose of unaccounted cash. This came to the notice of the Indian Railways authorities, who imposed restrictions to check evasion.[74][75]
However, according to a 2018 report from the RBI, approximately 99.3% of the demonetised banknotes, or ₹15.30 lakh crore of the ₹15.41 lakh crore that had been demonetised, were deposited with the banking system. The banknotes that were not deposited were only worth ₹10,720 crore.
Objectives and outcomes
The government said that the main objective of the exercise was curbing black money which included income which had not been reported and thus was untaxed; money gained through corruption, illegal goods sales and illegal activities such as human trafficking; and counterfeit currency. Other stated objectives included expanding the tax base and increasing the number of taxpayers; reducing the number of transactions carried out by cash; reducing the finances available to terrorists and radical groups such as Maoists and Naxalites; and integrating the formal and informal economies.[53][54][55][56][57]
Black money
The government estimated that ₹3 lakh crore, or approximately 20%, of the demonetised banknotes would be permanently removed from circulation.[58] However, according to a 2018 report from the RBI, approximately 99.3% of the demonetised banknotes, or ₹15.30 lakh crore of the ₹15.41 lakh crore that had been demonetised, were deposited with the banking system. The banknotes that were not deposited were only worth ₹10,720 crore.[12] Commentators concluded that the government failed in its aim of purging black money from the economy.[13]
Evasion
A jewellery store in a shopping mall with a notice "We accept ₹500 and ₹1,000 notes", even after they were no longer valid banknotes.
There were reports of people circumventing the restrictions imposed on exchange transactions by conducting multiple transactions at different bank branches, and by sending hired people, employees, and followers in groups to exchange large amounts of demonetized banknotes at banks.[59][60] In Gujarat, Delhi and many other major cities, sales of gold increased post-demonetization, surging the price as much as ₹45,000 (US$630) from the ruling price of ₹31,900 (US$450) per 10 grams (0.35 oz).[61][62] The Enforcement Directorate raided several forex establishments making backdated entries.[63] Money laundering using backdated accounting was carried out by co-operative banks,[64] jewellers,[65] sellers of mobile phones,[66] and several other businesses.[67]
The cash deposited into hundis (cash collection boxes in temples and gurudwaras) are exempted from inquiry by the tax department; this is sometimes to launder money.[68][69] After the demonetisation, there was a spike in donations in the form of the demonetised banknotes in temples.[70][71][72][73] People booked large number of railway tickets to dispose of unaccounted cash. This came to the notice of the Indian Railways authorities, who imposed restrictions to check evasion.[74][75]
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