Taxman suspects NRIs of exchanging old notes for local citizens

Four years after the government's decision to "demonetise" Rs 500 and Rs 1,000 notes, data suggest currency circulation in value and volume continuously increasing, a massive rise seen in the digital payments transaction, and seen a sharp decline in counterfeit notes detected in the banking system, according to data available on RBI. Demonetisation was announced by Prime Minister Narendra Modi on November 8, 2016, citizens were given 50-days to deposit old notes in banks and post-offices by December 30.

Non-Resident Indians (NRIs) who exchanged scrapped old Rs 500 and Rs 1,000 notes are under the lens of Income Tax (I-T) department officials who suspect of them exchanging the money on behalf local citizens, according to a report in Business Standard.

Sources were quoted as saying that Central Economic Intelligence Bureau (CEIB) informed the I-T department that old currency notes worth more than Rs 500 crore have been confiscated from Maharashtra, Tamil Nadu, West Bengal and Gujarat since March 31.

NRIs were initially allowed to exchange old notes with the Reserve Bank of India till March 31, three months later than the deadline for Indian residents.

However, the deadline for NRIs was extended to June 30 with the condition that an individual can exchange a maximum of Rs 25,000.

Tax officials suspect NRIs are exchanging old notes that were hoarded by money operators and have sought some details about these NRIs from the RBI.

Officials however, believe that the confiscated notes did not form even one percent of an estimated Rs 70,000 crore in old notes which are still out of the banking system. So far, both the RBI as well as the government are tight-lipped about the amount of notes that have been returned to banks.