The feedback given by ‘aam aadmi’ to the Central Board of Direct Taxes which called for demonetization of high denomination currency notes like Rs1,000 and Rs500 is likely to be rejected by the Ministry of Finance. A report from the ministry has stated that demonetization of high denomination currency notes like Rs1,000 and Rs500 is not likely to aid the curbing of black money. Top financial and economic brass of the Finance Ministry has rejected the demand. The top brass includes chiefs of Enforcement Directorate, Directorate Revenue Intelligence and the Financial Intelligence Unit.
“One common demand from the public is that high denomination currency notes, particularly Rs1,000 and Rs500, should be demonetized,” states the report made by the committee headed by CBDT chairman. The report has been submitted to the Finance Ministry. ”It is observed that demonetization may not be a solution for tackling black money or economy, which is largely held in the form of benami properties, bullion and jewellery. Further, demonetization will only increase the cost as more currency notes may have to be printed for disbursing the same amount,” the report adds.
The report also speaks of the adverse effects of demonetization on the country’s banking system. The main areas to be hit will be “logistic, issues like handling, and cash transportation may become difficult and also cause inconvenience to the general public as the disbursal or payments of wages/salaries to workers will become difficult.”
The CBDT had earlier made an appeal to the public on views in tackling and curbing black money. Black money is being held as benami properties, bullion and jewellery.