India Fights Black Money- PM Lays New Rules to Ease Demonetization Brunt

It’s three weeks since Prime Minister Narendra Modi scrapped out Rs. 1000 and Rs. 500 notes without success. Seeing the increasing frustration of common man with easy passing day, top ministers of the Union Cabinet called in a meeting on Monday to tackle main agenda of this Demonetisation exercise– to lay down a roadmap for cashless transactions.

Here is a brief outline of key discussions held in the cabinet meeting.

It's Time to Create a Clean India, Devoid of Black Money
It’s Time to Create a Clean India, Devoid of Black Money

Demonetisation Exercise: PM Modi’s Agenda Behind Conducting Meeting

  • Modi’s objective behind implementing demonetisation was to create a society based on transparent cashless transactions. This includes application of UPI (Unified Payment Interface), wallet apps and net banking. While the newly launched UPI executes quick bank-account-to-bank-account money transfers, mobile wallet apps like SBI Buddy and digital platforms such as Mobikwik and Paytm will speed up this process.

    PM Modi and Finance Minister Jaitley Conjured some Quick Strategies to Exercise Control on Black Money
    PM Modi and Finance Minister Jaitley Conjured some Quick Strategies to Exercise Control on Black Money
  • The Centre will call upon state government and local bodies to support them in this initiative. Accordingly, they’ve decided to make public interfaces tech-savvy. To put this into practice, Modi government plans to rope in fuel stations, petrol pumps, schools, cooperative societies, RDM (Rural Development Ministry) outlets, post offices and CSCs (Common Service Centres) in a digital circuit to facilitate online exchange of cash.
  • As per records, there are just 2 Lakh CSCs in the country right now. Now, the government plans to up it to 2.5 Lakh, as decided on Monday.
  • On the directions of the PM, Niti Aayog will put up a core committee comprising of central ministers. They’ll deliver presentation on latest technologies available for cashless transaction and their efficiencies. Ministries of agriculture, health, law and justice will be the first ones to deliver presentations.

 While the officials attending the meeting agree that it’s impossible to have 100% cashless society in India, but who said they can’t develop a ‘less-cash’ society?

The PM gives Black Money Holders a Chance to Repent

Finance Minister Arun Jaitley revised the laws for voluntary disclosure of black money. The government is likely to pass a bill concerning this in the Lok Sabha.

As decided by the Cabinet Ministers, PM’s Garib Kalyan Yojana will allow black money holders to declare their unaccounted cash till December 30, 2016. Once declared, the owners can pay taxes and penalties on this amount to save their share. People, who’ll declare their assets under PMGK will then have to pay a total tax amount comprising of:

  • 30% income tax,
  • or 33% penalty
  • 10% cess.

In short, the total amount payable will be up to 50% of the total declared amount. Out of the 50%, about 25% of the total black money would be used as government fund to improve housing, infrastructure, irrigation, health, education and employment. For those who don’t avail this facility, the total tax payable will be up to 75% Thus, only 25% money will be left in the hands of the black money holder. Now the ball is in the court of alleged money launderers. They can either retain 50% of the total amount or let go of the 75%.

All in all, it’s a good strategy that reflects government’s far-sightedness. Kudos to Modi government for coming up with an effective strategy to exercise control on black money.