The Narendra Modi-led government is likely to introduce an ordinance that will levy a penalty of Rs 50,000 on those still holding a "high amount" of the demonetised Rs 500 and Rs 1,000 notes after December 30 — the deadline to deposit all the scrapped notes in banks.
"There is a thinking within the government to provide for penalising those caught with high amounts of banned notes. If this is introduced, it will be in the form of an ordinance," a government official was quoted by the Hindustan Times as saying. A provision in the Constitution allows the Centre to enact a law when Parliament is not in session.
An individual will be allowed to hold only 10 notes of each of the scrapped notes after December 30 and anyone who holds more than that will, most likely, have to pay a minimum fine of Rs 50,000 or five times the amount in question — whichever is higher. There could also be criminal liability and the cases involving violation of the rule will be heard by the municipal magistrate who will decide on the penalty to be levied on the individual.
However, the Press Trust of India reported that the Centre had not officially announced anything and that the ordinance is expected to come up before the Cabinet on Wednesday.
The draft ordinance also consists of the recommendations of the central board of directors of the Reserve Bank of India (RBI). Demonetised currency notes can only be deposited in the RBI after December 30. A grace period is likely to be announced later. Citizens can deposit or exchange old notes at the offices of the RBI till March 31, 2017.
The Centre has also offered a window for people to deposit their unaccounted for money in old currency notes and 50 percent tax along with the penalty because if they are caught by the taxman with undeclared cash, the concerned individual would have to pay 90 percent of the amount they have.
Prime Minister Narendra Modi had announced his decision to demonetise old currency notes of Rs 500 and Rs 1,000 on November 8 this year in an attempt to curb the black money menace. Since then, people lined up outside banks and ATMs to exchange the old notes for new or deposit the old notes in the banks. The move led to a cash crunch with several deaths being reported across the country.
The Centre is expected to announce new cash rules once the deadline of December 30 ends.
