The Union Cabinet cleared an ordinance on demonetisation of old Rs.500 and Rs.1,000 notes, making their possession, transfer and distribution a punishable offence after December 30. There will be specified fines ranging from Rs.5,000 to Rs.50,000 for continued possession of the demonetised notes. The fine will be a multiple of the number of notes found in possession beyond the permissible limit--10 for souvenirs and 25 for the purpose of numismatics.
The penalties have been set out to prevent exploitative distribution of old money as wages and payments to the poor.While seen as a measure for extreme situations, the government feels making possession of the currency an offence is necessary to prevent two types of notes of the same denomination (Rs.500) being in circulation at the same time. The ordinance, which has been sent to the President for assent before it is notified, has a provision for certain categories of people to deposit the old currency with specified branches of the RBI till March 31, 2017 with explanatory notes.The condition has been added to the earlier provision on depositing notes till March 31.
Sources said RBI was expected to issue a notification delineating categories of individuals who would be allowed to deposit old notes with its branches after December 31.
Any payment towards tax, surcharge, penalty and deposit under the Pradhan Mantri Garib Kalyan Yojana (PMGKY) can be made in old bank notes of Rs.500 and Rs.1,000 only up to December 30, the finance ministry said.The PMGKY, which commenced on December 17, is open for declarations up to March 31.