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Modi plays the Trump Card: Rs 500 and Rs 1000 Notes Discontinued!

Updated on: 09 Aug, 2023 10:50 AM

When the intimation for Modi's speech scheduled at 8 pm arrived yesterday afternoon, we all thought maybe another Mann ki Baat is going to air. But what happened at 8 pm on 8th November 2011 is historically the biggest and the most surprising decision ever made in the direction of fight against fake notes which are used for anti-national and illegal activities, black money, and corruption in India.

Yes, you know what we are talking about, the government has taken a very bold step of discontinuing Rs. 500 and Rs. 1000 notes from 12 midnight yesterday and it has taken the country by surprise!

So, what happens now? What to do? How is this to be dealt with?

Here's an insight to what actually is proposed:

  • The existing Rs. 500 and Rs. 1000 notes are invalid now and cannot be used as money.
  • New notes with denominations of Rs. 500 and Rs. 2000 have been introduced;
  • For the change to happen, Banks are closed today for public and ATM's are closed for today and tomorrow i.e. 09.11.2016 and 10.11.2016;
  • Once the banks open from 10th November 2016, people can deposit their Rs. 500 and 1000 notes in their account till 30th December 2016.
  • For exchanging old notes of Rs. 500 and 1000 with the new ones, one should head to any of the 19 offices of RBI or any bank or recognised post offices for this cause with a valid ID proof.
  • A limit of Rs. 4000 per day is finalised up to 24th November 2016 for this purpose. This limit will be reviewed and changes accordingly.
  • For the withdrawals from banks, a limit of Rs. 10,000 per day but maximum up to Rs. 20,000 per week has been finalised. Though, the limits may be increased in the coming few days.
  • A limit on withdrawals from ATM's has also been decided at Rs. 2000 per day initially, which will be later raised to Rs. 4000 from 19th November 2016.

Remember, despite all the confusions relating to rupee notes, you are free to make any kind of non-cash payments through cheques, demand drafts, debit or credit cards and any electronic fund transfer. And, that the money is yours which can be deposited in the bank with NO LIMIT!

Also, for the next 72 hours, these notes will be accepted at government hospitals, railway ticket booking counters, government bus ticket counters, airline ticket counters at airports, fuel stations authorised by public sector oil companies, co-operative stores authorised by the central or state governments, government milk booths, and crematoriums and burial grounds.

Will I get the full amount back when I exchange the discontinued notes?

Yes, you will get the full amount in new denomination notes back when you exchange it from banks / RBI Offices / Post offices subject to the allowable limits, provided a valid ID proof is furnished at the time of transaction.

A sample of request slip for exchange of Old Notes into New Notes has been issued and the same is attached below for your reference, so that you have a basic idea before going to a bank:

Well in retrospect, we can say, that something big was in the corner of mind of the government since the inception of Income Declaration Scheme (IDS) as the government had marketed it as the last chance to convert your black money into white money and Narendra Modi proved it right by discontinuing Rs 500 and Rs 1000 notes overnight.

This sudden change will surely cause inconvenience in the nation since Rs 500 and Rs 1000 notes accounted for 85% of the total currency. But we should look at the big picture by celebrating this move as in the long run it will turn out to be a game changer in Indian Economy.

If you are confused and dont know what to do next, we have started a helpline related to Unaccounted Money for you. This service is specially designed for people who have savings / undisclosed income in their accounts and dont know what to do, where in our expert CAs will advise you on what to do next and will try to save you from all possible notices, penalties, etc by suggesting you the right procedures you can follow which is specific to your case.

CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.