In New Rule, Old Notes Above Rs 5,000 Can Be Deposited Only Once

The Reserve Bank of India (RBI) has imposed restrictions on the quantum of old Rs 500 and Rs 1,000 notes that can be deposited in bank accounts. The RBI said that old notes above Rs 5,000 can be deposited only once till December 30, 2016.

December 30 is the deadline for depositing the old notes. The RBI said that the depositor has to give an explanation as to why the old notes were not deposited earlier. The amount will be credited in the bank account only after receiving a satisfactory explanation. The explanation should be kept on record to facilitate an audit trail at a later stage, the RBI said.

The RBI also said that even in case of deposits below Rs 5,000, if the cumulative deposit exceeds Rs 5000, "they may be subject to the procedure to be followed in case of tenders above Rs 5000".

The RBI also said that deposits above Rs 5,000 can be credited only into KYC-compliant accounts and "if the accounts are not KYC compliant credits may be restricted up to Rs 50,000 subject to the conditions governing the conduct of such accounts".

However, the restrictions shall not apply to deposits under the 'Pradhan Mantri Garib Kalyan' scheme, 2016.

The Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016 (the Scheme) will remain open for declarations up to March 31, 2017.

Declaration under the Scheme can be made by any person in respect of undisclosed income in the form of cash or deposits in an account with bank or post office or specified entity.

Tax at the rate of 30 per cent of the undisclosed income, surcharge at the rate of 33 per cent of tax and penalty at the rate of 10 per cent of such income is payable besides mandatory deposit of 25 per cent of the undisclosed income in Pradhan Mantri Garib Kalyan Deposit Scheme, 2016. The deposits are interest free and have a lock-in period of four years.