Currency Demonetisation and Future course of Indian Economy

kvraghav · Post by **kvraghav** » 31 Jan 2017 20:03

Looks like real estate is in for more beating in blr with the h1b restrictions.

raj-senthil · Post by **raj-senthil** » 31 Jan 2017 20:52

Gurus..Need some help on a situation that my friend is facing..

He is in Land of Honey & Milk for past few years..He locked up close to 2L in 500 and 2000 in his home and no one back there to help him. He is wondering how to exchange/deposit his money.. Now he is cribbing his 2L became paper and more than that it became illegal. He may be going back somewhere in April..He wants to know if there is any way he can deposit his money..

Gus · Post by **Gus** » 31 Jan 2017 21:15

did he just wake up

JayS · Post by **JayS** » 31 Jan 2017 22:13

raj-senthil wrote:Gurus..Need some help on a situation that my friend is facing..

He is in Land of Honey & Milk for past few years..He locked up close to 2L in 500 and 2000 in his home and no one back there to help him. He is wondering how to exchange/deposit his money.. Now he is cribbing his 2L became paper and more than that it became illegal. He may be going back somewhere in April..He wants to know if there is any way he can deposit his money..

Marten · Post by **Marten** » 31 Jan 2017 22:49

raj-senthil wrote:Gurus..Need some help on a situation that my friend is facing..

He is in Land of Honey & Milk for past few years..He locked up close to 2L in 500 and 2000 in his home and no one back there to help him. He is wondering how to exchange/deposit his money.. Now he is cribbing his 2L became paper and more than that it became illegal. He may be going back somewhere in April..He wants to know if there is any way he can deposit his money..

I can help. Promise to help take away his fear of losing two Lacs.

Please ask him to share the address and we will get keys made. Until he gets back, we will also organize a few enterprising youngsters to stay in the house to safeguard it.

When he comes back later, he will not be worried about the two Lacs any more. Because I'm sure the house costs a bit more.

UlanBatori · Post by **UlanBatori** » 31 Jan 2017 22:59

I thought the exchange provision extends up to June? I mean with proper certification at port of entry and RBI deposit. My guess is that PMO will decide to create some vent for these problems involving Embassies/Consulates, but not sure. The idea that you have to travel to India at a cost of 2L to deposit 10K is rather, well, baboon-cratic. At some point the idiocy will occur to the GOI, maybe through a couple of lawsuits.

Suraj · Post by **Suraj** » 31 Jan 2017 23:08

TKiran wrote:Suraj sir, even after demonetization, the bribe takers are taking bribes in cash. Nothing has changed on the ground. In fact this demonetization has made these follows learn very good lessons which was there at the back of their mind for a long time, ie keep the financial information secret.

For example, you need to use benami s if your company is a private Ltd company, because a Pvt Ltd company is an entity on its own, and regularly you need to disclose the financial information to ministry of corporate affairs. For example vasan eye care, p chidambaram was caught with his cheddies down. But look at Tata sons, which is a partnership company, they have every right to keep the financial information secret, they just need to file the returns, and they are clear.

That's not how a partnership company works. When GoI asks about a property, you don't simply say it was transferred into your LP and therefore 'can keep it secret'. Because you'll have a paper trail of it going into your partnership. No company structure, PuLC, PrLC, LP anything, lets you use it openly as a tax dodge. That sort of claim implies the government literally has in place a set of structures that directly contradict its tax collection imperative. That does not exist. Government's first imperative is collecting money.

Don't confuse lack of action against such actions with the presumption that it's ok to do so. GoI's quite serious about this. After the earthquake of DeMo, they have both the Real Estate Act and Benami Act to help them out. What makes you think they won't modify the Companies Act of 2013 to make things even easier if they needed to ? It's not even a constitutional amendment.

NOTHING shields any old benami property from disclosure from behind an LP. The government can act on it, and so far has shown the willingness to act even to the extent of doing DeMo. If you were a betting man and BMer, do you *really* want to bet that:
a) they won't take action against LPs
b) they won't change the law itself related to Companies Act specifics ? They don't need a constitutional amendment, you know.
Continuing to pretend you're a BMer, you want to bet your fortune that GoI will faithfully avoid touching your wealth just because you're hiding it behind an LP ? *After* GoI went so far as to turn the country's entire economy upside down through DeMo ? You sound like a very brave man then...

TKiran wrote:The corrupt people now opening huf accounts and keeping their assets in huf companies, nobody can question such companies. They don't even need to put benaamis in charge of their assets. It's all white. Ie every day you can covert black money into white.

I agree that government won't find everything. But that's because lots of people are crooks. Crooks who morally grandstand about why they're doing the world a favor with their behavior, lacking the guts to simply state that they're committing a crime because they don't like the law and therefore will accept whatever punishment it brings.

In such a situation where people not just want to break the law and conceal, but also try to insult others by trying to weasel out saying 'others do it too', like they're 5 year olds in school claiming 'he started it!' Or worse, bring in false causation relationships like 'demo caused people to die!!'

The choice whether to break a rule is a personal one. If you feel your taxes are being misused and wish to commit civil disobedience to make a point, do so without trying to be a weasel about it. That's all I can say to anyone claiming stuff like 'government is inefficient'. Don't try to hide behind any sort of 'others do it too' or assorted other claims. You lose all basis for a principled stand the moment that's done.

TKiran wrote:It's all back to normal, believe me.

No sorry. "Bribery is still going on so it's back to normal" is just personal cynicism. In reality, data shows there's not even half as much cash in circulation anymore. Claiming 'I see everyone's back to using cash' is not a contrarian position. That's simply proof that the cash disbursal and daily liquidity concerns are gone.

Suraj · Post by **Suraj** » 31 Jan 2017 23:20

Talking about GoI being serious, here's 'just' about a quarter of the DeMo money already under the scanner - about $65 billion at stake.
I-T lens on deposits of Rs 4.17 lakh crore by 1.8 mn persons

Under the demonetisation drive, seven million PAN (permanent account number) card holders deposited high-denomination currency notes of Rs 500 and Rs 1,000, of which 1.8 million persons’ cash deposits are not matching with their tax profile, according to the income tax (I-T) department. These deposits aggregated to Rs 4.17 lakh crore, a senior tax official told Business Standard.

Most of these 1.8 million persons have deposited over Rs 5 lakh during the period of exchanging old notes and identified to be suspicious. The tax department has sought explanation from them within 10 days to avoid tax notices.

“We have compared a large amount of data with the income profile, turnover and various other particulars of income available in the I-T data bank. In the first phase where the deposits in accounts are not matching with our data, we are putting them on our e-filing portal, seeking explanation of source of income,” the Central Board of Direct Taxes (CBDT) chairman Sushil Chandra said in a press conference.

This has come when the CBDT on Tuesday launched Operation Clean Money project, which enables data analysis and profiling of assessees. The project would help in sending e-mails/texts to people whose cash deposits after the November 8 note ban do not match their income. E-mail and texts will also be sent to the taxpayers for submitting online response on the e-filing portal, the CBDT said in its press release.

This is just the first phase, as explained above.

raj-senthil · Post by **raj-senthil** » 31 Jan 2017 23:34

UB ji,
That is correct if you have cash in hand to show at port of entry..This guy have them at his home all locked up..I am not sure if you can tell the customs that money is at home..

When he said his situation to me today ..for a moment i laughed and them gave my token sympathy...

UlanBatori wrote:I thought the exchange provision extends up to June? I mean with proper certification at port of entry and RBI deposit. My guess is that PMO will decide to create some vent for these problems involving Embassies/Consulates, but not sure. The idea that you have to travel to India at a cost of 2L to deposit 10K is rather, well, baboon-cratic. At some point the idiocy will occur to the GOI, maybe through a couple of lawsuits.

UlanBatori · Post by **UlanBatori** » 01 Feb 2017 01:50

He wants to know if there is any way he can deposit his money..

For small baksheesh of 10% I will be glad to write a letter recommending that the Indian Ambassador in Ulan Bator take up his case.

But seriously, this is not a laughing matter. Desh should make it possible for embassies/SBI overseas branches to exchange this money, of course with whatever documentation.
Why he has 2Lacs is his problem, but others may be caught with all sorts of other amounts. They cannot be expected to walk back to India to deposit.

Dasari · Post by **Dasari** » 01 Feb 2017 07:22

Suraj wrote:Talking about GoI being serious, here's 'just' about a quarter of the DeMo money already under the scanner - about $65 billion at stake.
I-T lens on deposits of Rs 4.17 lakh crore by 1.8 mn persons
Under the demonetisation drive, seven million PAN (permanent account number) card holders deposited high-denomination currency notes of Rs 500 and Rs 1,000, of which 1.8 million persons’ cash deposits are not matching with their tax profile, according to the income tax (I-T) department. These deposits aggregated to Rs 4.17 lakh crore, a senior tax official told Business Standard.

Most of these 1.8 million persons have deposited over Rs 5 lakh during the period of exchanging old notes and identified to be suspicious. The tax department has sought explanation from them within 10 days to avoid tax notices.

“We have compared a large amount of data with the income profile, turnover and various other particulars of income available in the I-T data bank. In the first phase where the deposits in accounts are not matching with our data, we are putting them on our e-filing portal, seeking explanation of source of income,” the Central Board of Direct Taxes (CBDT) chairman Sushil Chandra said in a press conference.

This has come when the CBDT on Tuesday launched Operation Clean Money project, which enables data analysis and profiling of assessees. The project would help in sending e-mails/texts to people whose cash deposits after the November 8 note ban do not match their income. E-mail and texts will also be sent to the taxpayers for submitting online response on the e-filing portal, the CBDT said in its press release.
This is just the first phase, as explained above.

What govt has to do is to accelerate the investigation for few solid cases and make examples out of them for rest of the people. If they can send massage to BM hoarders that it is not just Rs 4.17 lac crores that is at stake but everything else that demonetization didn't touch, such as benami real estate etc. That should trigger panic and start beeline to declare BM money before March 31st and pay 50% tax and 25% no interest deposit for 4 years.

rahulm · Post by **rahulm** » 01 Feb 2017 07:45

Spent a good few hours with a senior Enforcement Directorate bureaucrat. Firstly, all these chaps develop a certain petty mean look.

The NaMo modus operandi is to use interstate bureaucracy to investigate and unearth fraud during DEMON. So a bureaucrat from, say Goa, can be sent to MP to spear head the investigation.

Frankly, these people are among the gold medal winners for corruption and sending a fox from one chicken coup to mind another chicken coup isn't going to magically turn the fox into a cuddly Pomeranian.

I am a NaMo supporter but, of late, and far be it from me to be cynical but I am getting this (unsubstantiated) feeling that, perhaps, one of the key objectives (along with the stated objectives) of DEMON was to wipe out the poll funding coffers of opposition parties in the lead up to the assembly elections.

The buzz in Goa is , BJP ranks had already converted their stashes but I can't substantiate any of this.

Suraj · Post by **Suraj** » 01 Feb 2017 07:56

rahulm: Did you convey your concerns to PMOIndia ?

rahulm · Post by **rahulm** » 01 Feb 2017 08:01

I did report BM hoarders that we talked about many pages earlier.

Suraj · Post by **Suraj** » 01 Feb 2017 08:07

Thanks!

venkat_r · Post by **venkat_r** » 01 Feb 2017 09:17

jamwal wrote:
Am I happy about it ? Yes. Some businesses like mine did need a moderate kick in ass to get in line. Some need much more.

What do I think of shameless chors whining like you are ? Screw them. Happy to see them crying.

Does it make me a scoundrel pretending to be a patriot ? If yes, screw you. If no, screw you even then.

- this is the attitude to defend a shitty program ? Wonderful !!

venkat_r · Post by **venkat_r** » 01 Feb 2017 09:30

raj-senthil wrote:Gurus..Need some help on a situation that my friend is facing..

He is in Land of Honey & Milk for past few years..He locked up close to 2L in 500 and 2000 in his home and no one back there to help him. He is wondering how to exchange/deposit his money.. Now he is cribbing his 2L became paper and more than that it became illegal. He may be going back somewhere in April..He wants to know if there is any way he can deposit his money..

This is the point - now he might be a criminal when he travels to India with illegal money!! I do not know what the answer or the solution to this is, but seeing the responses to your query here makes me puke. One guy above calling Indians as "Most people are crooks.." Probably has no clue why I am quoting him.

One big question is - will a person be comfortable taking that 2 L in cash to India? Most people are not sure and scared which is why it makes me uncomfortable with this program from GOI.

Supratik · Post by **Supratik** » 01 Feb 2017 10:52

@rahulm,

If everyone was a crook in India the system would have long collapsed. We have to rely on the possibility that only a minority of officers are corrupt. Specially in a scenario where there is intense focus on them. The rest about BJP guys knowing is rumor mongering. It has been reported several times that only a few at the top knew.

RajeshG · Post by **RajeshG** » 01 Feb 2017 13:53

CBDT chairman Sushil Chandra said the Tax Department has data that show over one crore bank accounts with deposits of above Rs 2 lakh and involves 70 lakh permanent account numbers (PAN). While the online platform, which is part of 'Operation Clean Money', will ask the identified taxpayers to fill in the details of their cash deposits, including money received from others, the sources suggested that the department was bracing for a duel in case it felt that the responses were not satisfactory. " The department has accessed a lot of data but the message is clear that only when there is strong evidence should we go after someone. If the accounts look okay then the taxpayer will be given the benefit of doubt," said a source.

Read more at:
http://economictimes.indiatimes.com/art ... aign=cppst

MUMBAI: The amount of potential black money in the system could be Rs 3 lakh crore or Rs 7.3 lakh crore, says the Economic Survey.

To estimate amount of black money, the Survey has used assumptions of soil rates - rate at which notes are considered to be too damaged to use and have been returned to the central bank - of other countries.

..............

Low denomination notes have highest soil rate. As per RBI data, low denomination notes have a soil rate of 33 percent per year, Rs 500 note 22 percent, and the Rs 1000 just 11 percent.

Read more at:
http://economictimes.indiatimes.com/art ... aign=cppst

Sachin · Post by **Sachin** » 01 Feb 2017 14:43

Mean while at Bangalore one senior IAS/KAS official has just seen Rs. 25 crore marching out through his door.
Note ban: ED attaches Rs 25 cr of assets of former K'taka officer - See more at: http://thefirstmail.in/news/news-details/153480-note_ban_ed_attaches_rs_25_cr_of_assets_of_former_ktaka_officer_#sthash.cTT2feMS.dpuf.
Note: The catch word here is "attaches" which means that due notices have been served, the official (or his benamis) could not justify the sources of income and with that money is now being taken away from them for ever.

rahulm wrote:The NaMo modus operandi is to use interstate bureaucracy to investigate and unearth fraud during DEMON. So a bureaucrat from, say Goa, can be sent to MP to spear head the investigation.

An idea was always there in my mind, but did not bother penning it down. Can GoI or the various IT departments use an approach of
i)the investigation - mainly scanning of monetary transactions be done by a group of officials from a far away state? Eg: Goa based officials sit in their office but work on identifying the trail of a businessman in West Bengal. The details of the businessman should be masked, so that for the officials it is just a set of records/data.
ii) the prosecution - once there is prima-facie evidence (which all gets reported on a computerised system), the findings and the details of the person under investigation can be shared to the officials in the state, who will actually work on prosecuting the chappie. If the prosecuting officials feel that there is no case, then that also has to be recorded in computerised systems with alerts flashing every where when such "closure reports" are done.

The whole idea being one group of babus doing an activity without knowing how their actions would land some one in trouble, and even if they know that cannot do any thing as the rest of the job is being done by another group of babus. Babus also not able to make any deals, as there would be a good audit trail, with multiple people involved (with many of them having no benefit as bribe etc. would not reach them any ways).

shyamal · Post by **shyamal** » 01 Feb 2017 16:07

venkat_r wrote:
raj-senthil wrote: This is the point - now he might be a criminal when he travels to India with illegal money!!.........
One big question is - will a person be comfortable taking that 2 L in cash to India? Most people are not sure and scared which is why it makes me uncomfortable with this program from GOI.

Did you actually read the posts?
The 2L is locked up inside his home in India. So how can he walk in/travel to India with that money? And that is his problem

Leaving 2L cash in an empty house seems strange to me, but what do I know.

I understand various legitimate concerns about the demonetization program. I also understand that there was quite a bit of genuine hardship.
But opposing it in such a baseless way is very strange unless one has personally lost quite a bit.

Just for info - A relative of mine(indian citizen) was working outside India for the last six months. She came back to India a week back and has managed to get Rs 20,000 in old notes exchanged from Kolkata RBI without any hassle.

rahulm · Post by **rahulm** » 01 Feb 2017 19:05

An idea was always there in my mind, but did not bother penning it down. Can GoI or the various IT departments use an approach of .............

How then with the GOI prevent people who they want to protect form being identified ? I do believe the GOI will selectively let some people go scot free. It would be naive to think the BJP has only doodh ke dhule in its ranks.

Supratik · Post by **Supratik** » 01 Feb 2017 21:46

Again you are making allegations without proof. Wait for mischief from BJP before jumping the gun. Per twitter many BJP leaders have lost money. It is Modi and his team and not BJP who is running the show.

SaraLax · Post by **SaraLax** » 02 Feb 2017 13:18

Supratik wrote:Again you are making allegations without proof. Wait for mischief from BJP before jumping the gun. Per twitter many BJP leaders have lost money. It is Modi and his team and not BJP who is running the show.

That's what posters like Habal & etc do - just post unsubstantiated info & allegations like the one Habal did a few days before i.e the primary reason for DeMo was for BJP to win the UP elections. WTH - what level of stupidity in such a line of thinking. So many BJP leaders have been hit by the DeMo (some in TN, MH have been caught .. as much info i could glean ... from the very minimal amount of reading of newspapers that i do these days because of the level of prestitution visible across all media businesses these days). Many BJP leaders on the ground will get hit by the Anti-Benami Property Transactions too. But i don't want to waste my time here - posting those media articles and police statements .. just to disprove Habal-isque type posts. I like Modi for what he is doing and if somebody does more than what Modi is doing & does it in a consistent manner ... i will comparitively like him/her more than how much i like Modi. But as of now i ignore Habalisque posts .... after all every god whether Krishna or Shiva or Rama .. was misunderstood & were even wrongly accused by so many people of their time too (not comparing Modi to god here).

hanumadu · Post by **hanumadu** » 02 Feb 2017 13:24

rahulm wrote:
An idea was always there in my mind, but did not bother penning it down. Can GoI or the various IT departments use an approach of .............
How then with the GOI prevent people who they want to protect form being identified ? I do believe the GOI will selectively let some people go scot free. It would be naive to think the BJP has only doodh ke dhule in its ranks.

The most BJP could have done is tell its people in no uncertain times to declare all their income during VIDS.

chetak · Post by **chetak** » 02 Feb 2017 18:34

Budget 2017 gives clues about demonetisation deposits in banks

Budget 2017 gives clues about demonetisation deposits in banks

About Rs10.38 lakh crore in demonetised currency was deposited in 2.57 lakh bank accounts, showing that a large chunk of the amount came from the super-rich

Roshan Kishore
Thu, Feb 02 2017.

The figures as disclosed in Union Budget 2017 also tell us that 31% of total value of demonetised currency has come back in individual deposits of Rs80 lakh or more.

The figures as disclosed in Union Budget 2017 also tell us that 31% of total value of demonetised currency has come back in individual deposits of Rs80 lakh or more.

New Delhi: One of the biggest expectations with Union Budget 2017 was that the government would divulge details of how much money has come back to the banking system after demonetisation. While the budget has disappointed in terms of giving overall statistics on this count, it does give an idea about the extent of money which has come in deposits of Rs2 lakh and above.

This is what Arun Jaitley had to say in his budget speech: “After the demonetisation, the preliminary analysis of data received in respect of deposits made by people in old currency presents a revealing picture. During the period 8th November to 30th December 2016, deposits between Rs2 lakh and Rs80 lakh were made in about 1.09 crore accounts with an average deposit size of Rs5.03 lakh. Deposits of more than 80 lakh were made in 1.48 lakh accounts with average deposit size of Rs3.31 crores.”

Union Budget 2017: Key highlights and themes

The total amount which has been deposited under these two categories can be calculated by multiplying the number of accounts with the average deposit figures mentioned by Jaitley. This gives a figure of Rs5.48 lakh crores for deposits worth less than Rs80 lakh and Rs4.89 lakh crore for more than Rs80 lakh. The aggregate deposits under the two categories amount to Rs10.38 lakh crore. This works out to around two-third of the total value of demonetised currency, which was valued at around 15.44 lakh crore. These figures also tell us that around 31% of total value of demonetised currency has come back in individual deposits of Rs80 lakh or more. These figures show that a large chunk of the demonetised currency which has come back into banks is from the super-rich.

How much of the deposits reflect unearthed black money?

According to Jaitley, there are more than 3 lakh companies which show profits. There are 76 lakh individuals who report annual income greater than Rs5 lakh. Out of this 56 lakh individuals belong to the salaried class, which means that their avenues for tax evasion are extremely limited. The rest 20 lakh individuals include businessmen and professionals.

It is possible that several of the high-deposit accounts belong to those who are already in the tax net, and have legitimate reasons for holding on to cash. The finance minister has not said anything about whether these are individual or business accounts. In the latter category, a lot of cash could be classified as cash in hand for business purposes, and it would be difficult to say whether these deposits reflect unearthed black money.

However these numbers point to one unequivocal conclusion: most of the super-rich did not flush their cash stocks down the pit. Instead, they have chosen to park their money with banks, fully aware that this might invite scrutiny from taxmen. It is therefore likely that they will have good answers ready if and when the taxmen come to ask questions.

There is very little reason to hope that the post-demonetisation data mining exercise will help unearth a significant amount of black money. This should not come as a surprise to those who have taken even a cursory look at the findings of taxmen on black money, who have reported in the past that cash is the least preferred way of holding unaccounted money.

jamwal · Post by **jamwal** » 02 Feb 2017 20:58

venkat_r wrote:
jamwal wrote:
Am I happy about it ? Yes. Some businesses like mine did need a moderate kick in ass to get in line. Some need much more.

What do I think of shameless chors whining like you are ? Screw them. Happy to see them crying.

Does it make me a scoundrel pretending to be a patriot ? If yes, screw you. If no, screw you even then.
- this is the attitude to defend a shitty program ? Wonderful !!

Saary saar, maybe this attitude is the reason why eye yam poor and uglee

and your souperiar attitude makes you see this program as sheettee.

SaiK · Post by **SaiK** » 02 Feb 2017 23:50

The easiest and cheapest way to cashless economy is ensuring that your cheque/check book is digitally certified and valid negotiable instruments. Ask me for solution for guaranteed payments.

Suraj · Post by **Suraj** » 03 Feb 2017 00:28

xposting from economy thread: Here's some data that shows just how badly misused the taxation setup is:

chetak wrote:Budget 2017 gives clues about demonetisation deposits in banks

Budget 2017 gives clues about demonetisation deposits in banks

About Rs10.38 lakh crore in demonetised currency was deposited in 2.57 lakh bank accounts, showing that a large chunk of the amount came from the super-rich

Suraj wrote:Another piece of information, regarding the anger about few tax sops above 10L (or other brackets). Here's a breakdown of assessee count and returned income:

The 2-5L bracket constitutes 35% of taxpayers, but only 8.5% of revenue. GoI expect to make it up from the highest tax slabs. The other major middle class brackets: 5-10L constitutes <10% of assesses, and 10L-1CR are <5% of assessees, but the latter i particular accounts for almost half of taxes.

Now type of IT paid:

Among individuals, salary constitutes over half of declared income. Most of the rest comes from business income. LTCG/STCG are practically negligible, as are house/property income. This is unlike the US or other major developed economies where the income of the wealthy, who pay most of the income taxes, comes mostly from business income + capital gains. Here's US IT breakdown.

As the data above shows, it's not even the case that 'only 30 million people in India pay income tax'. In fact, that's the number of people filing returns. Out of that, half pay taxes. 50% of income tax is paid by the 13 lakh people with declared incomes of Rs.10L to 1CR . Another 16% is paid by the 33K people with incomes of 1-5CR, and only 2700 people clain incomes above 5CR. Do any of these numbers sound realistic ? Until more undeclared income is unearthed by DeMo and the >1CR brackets gain many more members - remember IT just sent notices to 18 lakh people for undeclared deposits of 4.17 lakh crore - GoI doesn't have a lot of hands to play. I hope DeMo changes the tax brackets to such an extent that they can easily provide a significant tax benefit to the upto 10L brackets.

Source: Making tax data public will facilitate policymaking and administration

Of the total deposited money, Rs.10.38 lakh crore was deposited into just 2.57 lakh accounts. That's an average 4+ crore per deposit. Of course in reality there's a lot of skew but it doesn't hurt the thought process to assume everyone's depositing that much.

The previously quoted data shows that 33K assessees reported >1Cr income, with a total assessed income of 2.6 lakh crore, for an average 7.8 crore in income. However, the DeMo deposit data shows that there are quarter of a million people with an average 4Cr in liquid wealth. IT assessment data shows 36K people with assessed income over Rs.1Cr . Those 2.57 lakh people will largely have incomes in the 1Cr range, since it takes years, if not decades, decades to accumulate an average 4Cr in liquid cash, indicating even more in more illiquid assets.

Interesting times ahead.

vijayk · Post by **vijayk** » 03 Feb 2017 00:35

SaiK wrote:The easiest and cheapest way to cashless economy is ensuring that your cheque/check book is digitally certified and valid negotiable instruments. Ask me for solution for guaranteed payments.

I can understand digitally certified. What do you mean by negotiable instruments? Asset backed account guaranteeing payment?

hanumadu · Post by **hanumadu** » 03 Feb 2017 00:42

Suraj wrote: Of the total deposited money, Rs.10.38 lakh crore was deposited into just 2.57 lakh accounts. That's an average 4+ crore per deposit. Of course in reality there's a lot of skew but it doesn't hurt the thought process to assume everyone's depositing that much.

The previously quoted data shows that 33K assessees reported >1Cr income, with a total assessed income of 2.6 lakh crore, for an average 7.8 crore in income. However, the DeMo deposit data shows that there are quarter of a million people with an average 4Cr in liquid wealth. IT assessment data shows 36K people with assessed income over Rs.1Cr . Those 2.57 lakh people will largely have incomes in the 1Cr range, since it takes years, if not decades, decades to accumulate an average 4Cr in liquid cash, indicating even more in more illiquid assets.

Interesting times ahead.

Many of them would be business accounts, perhaps. Of course, why would businesses carry so much cash unless it was black?

Once all these have been brought into the tax net, perhaps significant tax relief can be provided. Very interesting times indeed.

sivab · Post by **sivab** » 03 Feb 2017 00:45

Suraj wrote:xposting from economy thread: Here's some data that shows just how badly misused the taxation setup is:

chetak wrote:Budget 2017 gives clues about demonetisation deposits in banks

Suraj wrote:Another piece of information, regarding the anger about few tax sops above 10L (or other brackets). Here's a breakdown of assessee count and returned income:

The 2-5L bracket constitutes 35% of taxpayers, but only 8.5% of revenue. GoI expect to make it up from the highest tax slabs. The other major middle class brackets: 5-10L constitutes <10% of assesses, and 10L-1CR are <5% of assessees, but the latter i particular accounts for almost half of taxes.

Now type of IT paid:

Among individuals, salary constitutes over half of declared income. Most of the rest comes from business income. LTCG/STCG are practically negligible, as are house/property income. This is unlike the US or other major developed economies where the income of the wealthy, who pay most of the income taxes, comes mostly from business income + capital gains. Here's US IT breakdown.

As the data above shows, it's not even the case that 'only 30 million people in India pay income tax'. In fact, that's the number of people filing returns. Out of that, half pay taxes. 50% of income tax is paid by the 13 lakh people with declared incomes of Rs.10L to 1CR . Another 16% is paid by the 33K people with incomes of 1-5CR, and only 2700 people clain incomes above 5CR. Do any of these numbers sound realistic ? Until more undeclared income is unearthed by DeMo and the >1CR brackets gain many more members - remember IT just sent notices to 18 lakh people for undeclared deposits of 4.17 lakh crore - GoI doesn't have a lot of hands to play. I hope DeMo changes the tax brackets to such an extent that they can easily provide a significant tax benefit to the upto 10L brackets.

Source: Making tax data public will facilitate policymaking and administration
Of the total deposited money, Rs.10.38 lakh crore was deposited into just 2.57 lakh accounts. That's an average 4+ crore per deposit. Of course in reality there's a lot of skew but it doesn't hurt the thought process to assume everyone's depositing that much.

The previously quoted data shows that 33K assessees reported >1Cr income, with a total assessed income of 2.6 lakh crore, for an average 7.8 crore in income. However, the DeMo deposit data shows that there are quarter of a million people with an average 4Cr in liquid wealth. IT assessment data shows 36K people with assessed income over Rs.1Cr . Those 2.57 lakh people will largely have incomes in the 1Cr range, since it takes years, if not decades, decades to accumulate an average 4Cr in liquid cash, indicating even more in more illiquid assets.

Interesting times ahead.

Madarassa math in that article.

1.09 crore accts x 5.03 lakh avg deposit/acct = 5.48 lakh crores
1.48 lakh accts x 3.31 crore avg deposit/acct = 4.89 lakh crores
Total deposit: 10.37 lakh crores
Total accts: 1.09 crore + 1.48 lakh = 1.1048 CRORE accts and NOT 2.57 lakh accts

Supratik · Post by **Supratik** » 03 Feb 2017 01:13

X-post

So those 1.48 lakh accts are the targets. The good news is that the crooks are small in number but have subverted the entire system. No wonder most people have supported demonetization despite hardship.

SaiK · Post by **SaiK** » 03 Feb 2017 01:24

vijayk wrote:
SaiK wrote:The easiest and cheapest way to cashless economy is ensuring that your cheque/check book is digitally certified and valid negotiable instruments. Ask me for solution for guaranteed payments.
I can understand digitally certified. What do you mean by negotiable instruments? Asset backed account guaranteeing payment?

just think how you can use your cheques as cash... how will you bring in technology to make it negotiable, as it is an instrument now that is not trusted by public much. They use DD.

I made my suggestions, so I own this idea here., and else where you might hear this idea.

I would not reveal much, if this should be accepted solution, which I think there is a strong possibility. All depends on how people get this. If they don't revert, I shall provide more details here on account of that failure.

for now, let us keep it tagged: #DNI

vijayk · Post by **vijayk** » 03 Feb 2017 02:45

may be patent it if you can

nandakumar · Post by **nandakumar** » 03 Feb 2017 16:35

Cheques are negotiable instruments. Which is why you hear of someone being prosecuted under the Negotiable Instruments Act for dishonour of a cheque. The title to the value implicit in the instrument can be endorsed and transferred if it is not made out as Account Payee to the name of the 'payee'. Also the drawer's bank cannot be faulted for paying to the credit of the account of the person to whom it has been properly endorsed. That said, it doesn't quite have the same versatility as that of a currency note when it comes to assured exchange for value. But if there is some mechanism by which the bank promises that equivalent value as mentioned in the cheque has been frozen from the account of the issuer and hence the person accepting it in exchange for sale of some good or service is not exposed to the risk of default. This is somewhat analogous to a brokerage subsidiary of a scheduled commercial bank such as ICICI Direct or HDFC Securities when they directly communicate with bank account of the customer, putting a lock on the amount for which security is purchased. But as to patentability of SaiK's idea there is just the danger that it might be challenged under the patents law, as a work of 'prior art'!

A_Gupta · Post by **A_Gupta** » 03 Feb 2017 16:50

I'm told that among the glass businesswallas in Firozabad, this use of bank-issued instruments in lieu of cash is a long standing practice, these are cashed in at the expiry date.

kapilrdave · Post by **kapilrdave** » 03 Feb 2017 17:03

Budget mandated the legit limit of cash transaction to be less than 3 lakh. Does it mean that people or companies cannot keep "cash on hand" more than 3 lakh in their accounts? If not, then it is a missed opportunity. Most of the companies have leveraged their cash on hand to deposit huge load of black money legally. These are the same people who were making %age based deals during DeMo, especially builders. The limit on cash-on-hand must have been imposed to not more than few lakhs. Then see how the tax evaders suddenly come out of their caves and start abiding the law.

Primus · Post by **Primus** » 03 Feb 2017 17:44

nandakumar wrote:Cheques are negotiable instruments. ................. But if there is some mechanism by which the bank promises that equivalent value as mentioned in the cheque has been frozen from the account of the issuer and hence the person accepting it in exchange for sale of some good or service is not exposed to the risk of default..............

This has been mentioned on this very thread before.

Even as far back as the 80s, the UK had a system where your bank gave you a credit card size piece of plastic that was called a 'check guarantee card'. Depending upon your credit worthiness, this would be up to a variable amount but was enough in those days for routine purchases of most things.

The card had a unique number on it, the vendor simply wrote it down on your check and the bank is then obligated to honor that amount, it is just as good as cash. You could thus give such a check to anybody, be it a business or an individual person.

Don't know if they still have it, probably do.

Sadly the US has never had anything like it.

kapilrdave · Post by **kapilrdave** » 03 Feb 2017 18:53

^^ The same can be achieved by the currency notes with an explicit expiry date.