Before You Hit The Bank To Exchange Banned Rs 1000 and Rs 500 Notes

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On November 8th, 2016, while the whole India was busy in wrapping up their busy day, Prime Minster of India, Mr Narendra Modi made an announcement that left over 1.3 billion people shocked and stunned. Mr Modi banned Rs. 1000 and Rs. 500 notes with almost immediate effect. The news spread like wildfire and people were on streets with a bunch of questions in mind. For most of the people, the biggest worry was the reserved currency that suddenly became obsolete.

By the wee hours of the day, it has become clear that Rs. 500 and Rs. 1000 notes would no longer be accepted from the very next day. Though the government made it clear that people can exchange their old currency for the new one from banks starting from 10th of November, people queued up at Petrol bunk, Bank ATMs to disburse the money that suddenly became too heavy on their pocket.

It was the dawn of the new financial era in India on November 9, 2016. By now it was clear that people can exchange Rs 1000 and Rs 500 notes with the new notes without losing a single penny. However, to implement the whole process and make the new process seamlessly integrated, banks and ATM are declared shut for two days, leaving many with no cash.

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There are hundreds of thousands are people who are eagerly awaiting for 10th November when the banks across the country will reopen to accept the obsoleted currency notes. You can expect a massive crowd and long queues at banks. You can either wait for days to avoid the rush or be a part of the rush.

But Wait!

Before you decided to hit the bank, there are few strict guidelines charted out by the government of India, and not many are aware of that. Failing to comply with these guidelines, the obsoleted currency notes would not be honoured by banks, and you may end up wasting your priceless time and efforts.

Here is something you MUST know before you head to a bank:

  • You can exchange only up to Rs. 4,000 with the new notes, rest of the amount you need to deposit in your bank account until November 24, 2016.
  • You can visit any bank or branch or exchange only up to Rs. 4,000.
  • You can deposit any amount of old currency notes into your account. However, to deposit more than Rs. 20,000 in your account you need to submit Pan Card Copy, ID proof and a declaration form stating the source of the money until November 24, 2016.
  • Cash deposit above Rs. 2.5 lakhs Rs. 10 lakhs will attract tax plus penalty of 200% in case of your false declaration until December 30, 2016.
  • In the event of any mismatch of declared source of income of deposited money, the government may seize the deposited money. This could also be extending to complete account freeze in case of tax evasion.
  • You can only withdraw up to Rs. 10,000 per day or 20,000 per week in cash through bank cheque until 24th November 2016.
  • You can withdraw only up to Rs 2,000 per day from ATM until 18th November 2016. The limit would be revised to Rs. 4,000 from November 19, 2016.

The government of India is committed to taking strict action against those who would be trying to trick banks while transacting. The government will match the deposited amount with the Income tax filed by the person, and in the case of any mismatch, the government will treat it as a fraud act.

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Many reports are surfacing from various parts of the country, especially from Rajasthan and Gujarat, where people are buying jewellery in a bid to convert their undeclared income, or call it black money, to evade tax. The government, however, has tightened the noose of those traders and asked them to collect the PAN number of Pan card copy who are buying the gold from November 9, 2016, onwards.

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