Many possessing Rs 500 and Rs 1,000 notes are unlikely to come forward and exchange or deposit the notes in bank accounts. Their situation was possibly exacerbated by the government's announcement that cash deposits above Rs 2.5 lakh threshold under the 50-day window could attract tax and a 200 percent penalty in case of income mismatch.
Any mismatch with income declared by the account holder will be treated as a case of tax evasion. "This would be treated as a case of tax evasion and the tax amount plus a penalty of 200 percent of the tax payable would be levied as per the Section 270(A) of the Income Tax Act," Revenue Secretary Hasmukh Adhia said.
People are now resorting to various ways to get rid of that stashed away cash. There is also a possibility that almost 20 percent of the notes won't be exchanged. The Indian Express quoted Ritesh Jain, chief investment officer, Tata Asset Management as saying, "There could be permanent wealth destruction of Rs 3 trillion (or Rs 3,00,000 crore) if 20 percent of these notes are not exchanged which could impact inter-personal lending, real-estate, jewellery and banks with such exposure."
Burning these paper notes is the quickest way to get rid. The process had reportedly begun in Uttar Pradesh.
The burnt remnants of Rs 500 and Rs 1,000 currency notes were found at a place in Bareilly on Wednesday, police said. Informed sources said the burnt currency notes were reportedly brought in sacks and then dumped by workers of a company on Parsa Kheda road at CB Ganj in Bareilly.
Police officials said prima facie, the currency notes appeared to have been cut, damaged and then burnt. The police has since taken over the remains of the currency notes and the Reserve Bank of India (RBI) officials have been informed of the incident.
With inputs from agencies