CONTROLLING THE BLACK MONEY MENACE- VARIOUS STEP TAKEN
Black Money has been a menace for the Indian economy for a very long time. Many steps had been taken to curb its hoarding. However, they had procured only little or no benefits.
The Voluntary Disclosure of Income Scheme was brought in 1997 by the CBDT. It had given an opportunity to the income tax or wealth tax defaulters to disclose their undisclosed income at the prevailing tax rates. This scheme had also ensured that the laws relating to economic offences was not applicable for those defaulters. Over 350,000 people had disclosed their income and assets under this scheme, which had bought revenue of ₹78 billion (US$1.2 billion) to Indian finance ministry. The scheme was closed on 31 December 1997. This was the first of the measures to curb the Black Money menace.
Coming to this decade, the latest measure is the scrapping of Rs. 500 and Rs. 1000 notes. This might look a hastily taken step; however, PM Modi had been laying its foundation since a long time. The steps taken are as follows –
- SC monitored SIT was constituted in 2014 to review on the Black Money scenario
- The launching of the Jan Dhan Yojana is a step towards financial inclusion, because many unbanked people got their own bank accounts through this step. 25.45 crore accounts have been opened so far and Rs 45,302.48 crore has been deposited in these accounts.
This will now also be a huge help in curbing black money. Now that Rs 500 and Rs 1000 currency denomination notes have been banned, transactions from banks will acquire importance. Opening of accounts even in the remotest areas will help the rural villagers. They will not feel the pinch of the banning of the currency notes.
- The government renegotiated the Double Tax Avoidance Agreement (DTAA) with Mauritius to impose Capital Gains Tax if such Capital Asset is situated in India. An Automatic Information Exchange Agreement with Switzerland was negotiated. Agreements are also being negotiated with other tax havens. From 2017, Organisation of Economic Cooperation and Development (OECD) countries have agreed to share information on foreign account holders with their home countries.
- The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 was launched to bring back black money stashed in foreign countries and tax havens. The scheme ended on 30 September, 2015.
- Income Disclosure Scheme was launched in 2016. It allowed income tax assessees to declare any unaccounted income from the past. It was open for four months, from 1 June to 30 September 2016. It gave an opportunity to tax evaders to disclose their unaccounted income or assets, and come out clean by paying the applicable tax, cess and penalty totaling 45% of the undisclosed income.
- A 20 per cent penalty on all cash transactions exceeding Rs 20,000 to purchase or sell a property (real estate). This was aimed at curbing the role of black money in real estate transactions.
- Tax Collection at Source was imposed at a nominal rate of 1 % on cash purchases exceeding Rs. 2 lakh. This was to create an audit trail of high value cash transactions
- The Benami Transactions Amendment Act, 2016 gave more teeth to the authorities to curb benami transactions. It replaced the Prohibition of Benami Property Transactions Act, 1988
And finally the scrapping of Rs. 500 and Rs. 1000 notes. However Narendra Modi is not the first PM to scrap high value notes. Former PM Morarji Desai had banned all currencies above Rs. 100 in 1978. However, in 1987, the Rs. 500 notes made a comeback and the Rs. 1000 notes in 2000.
The incidence of fake Indian currency notes in higher denomination has increased. For ordinary persons, the fake notes look similar to genuine notes, even though no security feature has been copied. The fake notes are used for antinational and illegal activities. High denomination notes have been misused by terrorists and for hoarding black money. India remains a cash based economy hence the circulation of Fake Indian Currency Notes continues to be a menace. In order to contain the rising incidence of fake notes and black money, the scheme to withdraw has been introduced.
RBI has come up with two new denominations in the Mahatma Gandhi Watermark Series – Rs. 500 and Rs. 2000.
Rs. 500 Notes –
- It will have an inset letter ‘E’ in both the number panels. The note will have the signature of Governor Dr Urjit R Patel and will bear the year of printing ‘2016’ and Swachh Bharat Logo printed on the reverse of the bank note.
- The new size of the note is 66mm x150mm and the new colour of the note is stone grey.
- On the back side of the note, an image of the Red Fort with Indian flag has been placed.
- Other features include intaglio printing of Mahatma Gandhi portrait, Ashoka Pillar emblem, bleed lines, circle with ₹ 500 in the right, and the identification mark to enable the visually impaired person to identify the denomination.
Rs. 2000 Notes –
- There will be 2 sets of these notes. One with an inset letter ‘R’ and the other with no inset letter.
- It will bear the signature of Governor Dr Urjit R Patel, and the year of printing ‘2016’ printed on the reverse of the banknote.
- The new note has Motif of Mangalayan (Mars mission) on the reverse.
- The colour of the note is magenta and the size is 66 mm × 166 mm. Other key features include geometric patterns aligning with the overall colour scheme, both at the obverse and reverse.
Front side features
- See-through numeral 2000
- Denominational numeral २००० in Devnagari
- Portrait of Mahatma Gandhi at the centre
- Micro letters ‘RBI’ and ‘2000’ on the left side of the banknote
- Windowed security thread with inscriptions ‘भारत’, RBI and 2000 on banknotes with colour shift. Colour of the thread changes from green to blue when the note is tilted
6. Ashoka Pillar emblem on the right and Mahatma Gandhi portrait and electrotype (2000) watermarks
- For visually impaired: Intaglio or raised printing of Mahatma Gandhi portrait, Ashoka Pillar emblem, bleed lines and identity mark
8. Horizontal rectangle with ₹2000 in raised print on the right
9. Seven angular bleed lines on left and right side in raised print
It should be noted that there have been two banknote series since our Independence –
The Ashoka Pillar Watermark Series
Bank notes in this series in Rs. 10 denomination were issued between 1967 and 1992, Rs. 20 in 1972 and 1975, Rs. 50 in 1975 and 1981 and Rs. 100 between 1967-1979.
The banknotes issued in this series had the symbols representing science and technology, progress and orientation to Indian art forms.
In the year 1980, the legend Satyameva Jayate — ‘truth alone shall prevail’ — was incorporated under the national emblem for the first time.
The Mahatma Gandhi Watermark Series:
In October 1987, Rs. 500 banknote was introduced with the portrait of Mahatma Gandhi and Ashoka Pillar watermark.
Mahatma Gandhi (MG) series banknotes – 1996 were issued in the denominations of Rs. 5, (introduced in November 2001), Rs. 10 (June 1996), Rs. 20 (August 2001), Rs. 50 (March 1997), Rs. 100 (June 1996), Rs. 500 (October 1997) and Rs. 1,000 (November 2000).
The Mahatma Gandhi Series – 2005 bank notes were issued in the denomination of Rs. 10, Rs.20, Rs. 50, Rs. 100, Rs. 500 and Rs. 1,000 and contained some additional/new security features as compared to the 1996 MG series.
The Rs. 50 and Rs. 100 banknotes were issued in August 2005, followed by Rs. 500 and Rs. 1,000 denominations in October 2005 and Rs. 10 and Rs. 20 in April 2006 and August 2006, respectively.