Ban of currency notes in India has paid a huge panic among the people of our country. The main reason to take such step was to eradicate black money. Black money is something which is earned illegally or unlawfully. This kind of income helps the money holder to avoid tax payments. In order to meet such situation Modi’s government declared the ban of 500 and 1000 rupees notes.
Few months back prime minister Modi has declared income declaration scheme for the benefit of both the government and the individual. All the people who hold black money can surrender that money by paying 45℅ tax amount. By means they can convert that black money into white money which can be defined as legal earnings. For example if a person is declaring 100 lakhs rupees, he is supposed to pay 45 lakhs rupees as tax and take the remaining 55 lakhs rupees as legitimate income. The person will not be questioned the source of money.
In spite of such a beneficial scheme nobody came forward. Modi has to take another step to eradicate black money and help the flow of money for the economic growth of the country. This step took its form as ban of currency notes in India.
This decisions is supposed to show an impact on the people having black money but every individual is facing problems regarding the ban. Like every other thing even the ban has certain advantages and disadvantages. Some of them are listed below :
1) Black money gets dissolved : Black money is usually hidden in the form of 500 and 1000 rupees notes. With the issue of ban of currency notes and a legal procedure to exchange old currency notes with the new currency notes, black money in India is likely to get dissolved. There is no alternative for the black money holders other than bringing out the black money and accepting the penalty or fine in the form of tax. Now this money will help in the economic growth of the country.
2) Pause on fake currency notes : Issue of 2000 notes has a great impact on the scammers . Scammers who print fake 500 and 1000 rupees notes will no longer be active.
3) Smuggling and arms dealing : Smuggling involves funding of illegal money. With the issue of new currency and its uniqueness there will be a slow down in smuggling and dealing in arms.
1) Lack of cash in banks, ATMs and other financial institutions.
2) Cost of printing and supply of notes will be high.
3) People who tend to exchange there old currency with new 2000 notes need to stand in huge queue for hours.
4) Workers who deal with day to day cash transactions will suffer for a short period of time until there are sufficient supply of 2000 rupees notes
5) Only some portion of black money will be identified, left over money is usually held with the foreign banks which cannot be traced out.
Although these advantages and disadvantages are for short term, issue of new currency has a great impact on every individual and created a Chaos throughout the country.