Page 45 - Banking Finance December 2016

In October 1987, Rs 500 banknote was introduced with the Institutional support from financial institutions, telecom plat-
portrait of Mahatma Gandhi and Ashoka Pillar watermark. forms and payment interfaces will have to rise to the occa-
Mahatma Gandhi (MG) series banknotes - 1996 were issued sion and fill the supply gap. They will have to adapt to the
in the denominations of Rs 5, (introduced in November ways of all, particularly those that are new to formal finan-
2001), Rs 10 (June 1996), Rs 20 (August 2001), Rs 50 (March cial transactions. But there is more hope than ever before.
1997), Rs 100 (June 1996), Rs 500 (October 1997) and Rs
1,000 (November 2000). Will this eradicate black money and corruption in India?
Some "experts" have warned that Indians are creative and
The Rs 50 and Rs 100 banknotes were issued in August will find ways to circumvent this demonetization. But re-
2005, followed by Rs 500 and Rs 1,000 denominations in moval of large bills will make several criminal and illegal
October 2005 and Rs 10 and Rs 20 in April 2006 and Au- activities more costly such as tax evasion, human traffick-
gust 2006, respectively. ing, drugs, extortion and terrorism.

Conclusion Scaling back large bills will not end crime, but it will force
The next few months will be painful but it should be seen as the underground economy to employ riskier and less liquid
a positive step for an economy, which is trying hard to re- payment methods. There is reason, therefore, to believe
form its corrupt self. There will be wide need for debit cards, that this move will reduce corruption and several forms of
electronic transfers and mobile payment platforms. criminal transactions in the economy. T

Pay tax over Rs. 1 lakh to win certificates from govt

The honest and diligent taxpayer must be appreciated and enue secretary told HT. "We want tax payers to be made
encouraged - this part of the nation building process...all tax payers should
is the new man- feel proud," Adhia said.
tra of the NDA
Sources in the department who did not wish to be named
government,
said this is part of the government's taxpayer engagement
and the Central
initiative.
Board of Direct
Tax (CDBT), has Adhia added that the department's working on building a
been entrusted friendly-image and will not be vindictive towards anybody.
the job of send- Tax officials have been asked to be firm but "not to ha-
ing out certifi-
rass those who have not availed the four month Income
cates of honour to individuals who pay above Rs.1 lakh
Disclosure Scheme- providing an opportunity to all those
income tax.
with unaccounted wealth to come out clean. The recently
CBDT has already mailed over 800,000 such certificates concluded scheme is set to fetch over Rs. 30,000 crore in
since the initiative was launched less than two weeks ago. taxes from a total disclosure of Rs 65,250 crore of unac-
An official source said that the department has been counted wealth in the form of cash and other assets.
asked to undertake the exercise on priority. So many more
Prime Minister Narendra Modi had recently asked tax of-
such certificates will be sent out in the coming days.
ficials to remove the fear of harassment from the minds
According to government data, only 1 million taxpayers de- of taxpayers in the country and work towards bridging the
clare incomes over Rs.10 lakh, below which the tax rate is "trust deficit".
20%. This is only 2% of the total taxpayers in the country.
The message is clear: While no taxpayer will be allowed
This will be an annual affair. "The tax department is not to hoard unaccounted cash and assets, the department
there to harass the citizens..while it is firm, it is not going will also develop a soft and friendly image. (Source :
to take any step to harass citizens," Hasmukh Adhia, rev- Hindustan Times)

BANKING FINANCE | DECEMBER | 2016 | 45

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