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President approves promulgation of Specified Bank Notes Ordinance, 2016


President Pranab Mukherjee gave his assent for the promulgation of the Specified Bank Notes (Cessation of Liabilities) Ordinance, 2016.
The ordinance makes the holding of Rs 500 and Rs 1000 banknotes after 31 March 2017 an offence, which will attract a fine of Rs 10000 or five times the cash held, whichever is higher.
Highlights and Objectives of Ordinance
• It provides for amending the Reserve Bank of India (RBI) Act, 1934 to provide legislative support for extinguishing the demonetised banknotes that are not returned.
• It also wants to provide a clarity and finality to the liability of the RBI and the Union Government for the Specified Bank Notes (SBNs).
• It provides an opportunity to those who were unable to deposit the Specified Bank notes within provided time. It facilitates all Indian citizens who were not in India between 9 November and 30 December 2016 to deposit these notes at the specified Issue Offices of RBI until 31 March 2017.
• Citizens who are not a resident of India or NRIs, the facility would be available until 30 June 2017. This timeline will provide an adequate time to plan a visit to India as per their convenience. During their visit, they will be able to declare the number of such denominations of such notes to the Customs authorities at the airports and other entry points.
• Any false declaration will invite a fine of 50 thousand rupees or five times the amount of the face value of the Specified bank notes tendered, whichever is higher.
The aforementioned facility would be subject to the regulation of “Foreign Exchange Management (Export and Import of Currency) Regulations, 2015. According to the regulations, bringing in such currency notes into the country is restricted to Rs 25000 per person. However, other FEMA provisions will continue to apply in the case of people in Bhutan and Nepal.
Earlier, the ordinance was approved by the Union Cabinet on 28 December 2016.
Background
The Specified Bank Notes (Cessation of Liabilities) Ordinance, 2016 is a follow-up exercise of the Union Government’s decision in which it on 8 November 2016 cancelled the legal tender character of existing series of banknotes of denominations of Rs 500 and Rs 1000 in circulation.
Before promulgation of the Ordinance, the Union Government has taken several steps to eliminate the menace of unaccounted money in the economy. The steps taken include
• Setting-up of the Special Investigation Team (SIT)
• Enacting a law regarding undisclosed foreign income and assets
• Double Taxation Avoidance Agreements between India and Mauritius and India and Cyprus were amended
• Implementation of the Income Declaration Scheme 2016
• Amendment to the Benami Transactions Act
• Automatic Exchange of Information (AEOI) with Switzerland for getting information on Bank accounts held by Indians in the country.
• Encouragement in the use of non-cash and digital payments and much more.

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