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IMPACT OF RECENT DEMONETIZATION OF HIGH VALUE CURRENCY

Service Tax - By: - Dr. Sanjiv Agarwal - Dated:- 11-11-2016 Last Replied Date:- 12-11-2016 - In an unprecedented move, the Government of India has indeed played a trump card by hitting at so many targets by just one shot demonetizing the two most valued currency notes in India, viz ₹ 500 and ₹ 1000. While nobody prevented any of the Governments in the past to do so to check various malpractices - financial, social, political or otherwise, this move of Prime Minister Mr. Narendra Modi .....

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any more. The announcement came around 8.30 PM and came into operation from midnight leaving just 200 minutes for people with such currency to use it. Yet, some people did managed that and purchased high value items, bullion & jewellery and even gift vouchers at branded stores. Great minds indeed ! The declaration of ₹ 500 and ₹ 1000 currency notes to be no longer 'a legal tender' will address many problems of the country, viz - Counterfeit / fake currency notes Money use .....

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ed (even households) from such currency, entire lot of terrorist money comprising of these notes gets washed out and of no use and whatever money was kept as earned out of corrupt practices gets dumped. From today on, there may be no need to conduct searches or raids by income tax / other tax collectors, CBI, Anti-Corruption and other such bodies and there will be relatively free for other productive works. Even the corrupt officers and people will have to start earning afresh or stop such deali .....

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may also affect spending habits of people with easy money, e.g. luxury hotel & restaurant spends, liquor consumption, travel holidays and investment in real estate where part of consideration was cash component. The share market may also take a hit initially but will rebound. Bullion may be costlier due to being a preferred choice now. With this, while the currency gets filtered, commercial transactions will also get addresses from 1st April 2016, when India migrates to GST as is most likel .....

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illiquid' currency will come into the main stream economy. Another good impact could be that people will now fear hoarding hard cash at home, e-commence and electronic payment will grow and cash transactions will substantially be reduced. While banks will be flushed with saving and fixed deposits, their liquidity will to go up which may result in marginal (upto one percent) lowering of interest rates. However, this may be passed on to borrowers by way of lower interest rates. All said and d .....

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