How government can use 2000 Rs. currency withdrawal opportunity to unearth black money hoarders

How the government can use 2000 Rs. currency withdrawal opportunity to unearth black money hoarders

Introduction

The Reserve Bank of India (RBI) on Friday 19 May 2023 announced that 2000 Rs. currency notes will be withdrawn from circulation. The notes will continue to be legal tender till September 30 2023. The RBI has asked banks to provide deposit and/or exchange facilities for 2000 Rs. notes until 30 September 2023. The RBI reported on May 19 that around 89 percent of the Rs 2,000 banknotes were printed before March 2017 and are nearing the end of their anticipated lifespan of 4-5 years. According to the RBI, the total value of these banknotes in circulation has decreased from Rs 6.73 lakh crore, which represented 37.3% of notes in circulation on March 31, 2018, to Rs 3.62 lakh crore, which represented only 10.8% of notes in circulation on March 31, 2023. So it is huge money. Now low income and middle income citizens do not have much access to currency of 2000 Rs. except those who may be involved in making money through illegal practices. So it is speculated that the majority of currency may be with those hoarders who deals in corruption, bribing, avoids taxes, earns money through illegal means. If the Central Government can unearth even two lakh crore it will be beneficial as it will help to decrease the debt of the nation.  

How the Central Government can utilize this opportunity

The Central Government can do following things to detect black money.

1. The currency should be deposited in bank account. Each such deposited account should be profiled.

2. The Central Government should direct Income Tax Department and Enforcement Directorate to closely watch the data of 2000 Rs. currency deposition in Bank accounts.

3. With bank account information and linked Pan Card and Aadhar card information the Income Tax Department and Enforcement Directorate can track those peoples who deposited 2000 Rs. currency.

4. The Income Tax Department should closely match the deposit with the income profile and tax return profile of the persons.

5. This will help to bring out the anomalous account with black money.

6. Then Government can freeze those account and take the black money.

Conclusions

The Central Government can utilize this opportunity to unearth black money. The above suggested measures should be taken by the Government. If suggested measures correctly followed and implemented then good amount of black money, if present, can be unearthed and will be available for the Government to use for the nation.