In a surprise move the government on Tuesday night demonetised Rs 500 and Rs 1000 notes. A move that is a death knell for black money hoarders.
“Those with black money will have to now declare the money to the bank to exchange them for new notes of Rs 500 and Rs 1000. This would mean paying tax, penalty and interest and could also lead to imprisonment,” said an official in the income tax department, who did not wish to be named.
But the government will have to follow up Tuesday’s effort with further initiatives every three to four years to ensure that black money is flushed out of the economy, say experts and insiders.
“Black money is generally stashed in the highest currency denomination available in the economy,” explained the source quoted above.
But the new Rs 2000 notes will have a GPS enabled chip for tracking, making it difficult to keep large stashes of them.
But every problem has a solution.
“In a few years gold bars and biscuits will become the new the new currency for exchange where legally obtained money cannot be used,” explained a tax consultant who did not wish to be named.
For those with a corrupt bent of mind, the GPS-enabled currency notes can be used to buy gold bars and biscuits are regular intervals.
So the advice for the government is to demonetize currency notes at regular intervals.