MODI CALLS ON CABINET MEET,PENALTY ON HIGH DEPOSIT TO BE DISCUSSED

Prime Minister Narendra Modi has called a Cabinet meeting on Thursday night, possibly to discuss the penal 200 per cent tax that is keeping away the scrapped Rs. 500 and Rs. 1000 notes from entering the formal system.

The meeting, summoned at a very short notice, comes amid reports of high tax penalty terrifying people from putting their cash savings into the formal banking system.

Sources said the government wants all of the Rs. 500 and Rs. 1000 notes to be deposited and not burnt or destroyed for fear of penal action.

The Income Tax Department had warned that cash deposits above Rs 2.5 lakh threshold post demonetisation decision could attract tax plus a 200 per cent penalty in case of income mismatch.

It was stated that the department was tracking all cash deposited from November 10 to December 30, above a threshold of Rs 2.5 lakh in every account.

This had put a fear in people with reports of the banned currency even being destroyed.

Sources said the government may come out with a deposit scheme or an instrument like bond where the cash savings in the banned notes could be deposited.

Mr. Modi’s November 8 shock ban on high-denomination currency had swept away 86 per cent of the currency in circulation in the biggest ever crackdown on black money, corruption and counterfeit currency. The move led to Rs. 14 lakh crore worth currency being withdrawn from circulation.

A 50-day window was given to holders of the old currency to deposit in their bank accounts. But the penal tax provisions were deterring many. Courtesy: PTI