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Demonetization of high value Currency will bring “a behavioral change” in Economy and pain due to Cash Crunch will be a non-event by 2018

Pabrai added that Prime Minister Narendra Modi understands he may end up as the net loser after demonetisation and he did it for the good of the nation

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Thousand Rupee Note India. Wikimedia

Mumbai, Dec 31, 2016: Demonetization of high value currency will bring “a behavioural change” in the economy and the pain due to cash crunch will be a non-event by 2018, said Mohnish Pabrai, Managing Partner at Pabrai Investment Funds and Dhandho Holdings.

“Indians will adapt to an economy with scarcity of cash and demonetisation will result in a behavioural change.

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“There will be a segment of the population that will realise that it is better to play within the system,” he said.

This would have huge positive impact in the long run, he said in an interview with BTVi.

“..Demonetisation is short term pain and long term gain. It is a very positive move for India. I think to some extent there are positive unintended consequences.

“I do not think the government fully realised …the degree to which we are going to go digital,” he said.

He said “the pain” due to cash crunch that people are going to feel in Q4 (fourth quarter) and perhaps rolling into early part of 2017 will be “a non-event by 2018 and beyond”.

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Pabrai said investors would be better off by not focusing on macro factors.

Pabrai added that Prime Minister Narendra Modi understands he may end up as the net loser after demonetisation and he did it for the good of the nation.

He also said that there would be a political impact and it might change people’s vote preference and he also felt that the shift to digital transaction enabled small businessmen to better handle finances.

Talking about investments in stock markets, he said low prices of equities were a cause to rejoice because net buyers of equities benefit from lower share prices and buyers should welcome recent changes in world economics.

“Indian blue chips in the long run will do really well,” he said.

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The key is to assess future business of the stock and take advantage of price fluctuations. The patience and analysis of companies is key to investing, he added.

“India has the odds very heavily in its favour to deliver much higher returns than the US markets can deliver,” Pabrai said. (IANS)

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Income Tax Officers Announce 17-point Checklist to Track Unaccounted Cash During Demonetisation

I-T Dept issues 17-point checklist to trace unaccounted DeMO cash

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Examination will take place of cash deposits from period April 2015 to November 8, 2016. Pixabay

In a bid to seize illegal cash, the Income Tax Department has issued a 17-point checklist to tax commissioners across the country to track those who deposited unaccounted cash during demonetisation.

In a directive to the Principal Chief Commissioners of Income Tax and Principal Director Generals of Income Tax, the Central Board of Direct Taxes (CBDT) said that in continuation of the handling of cases related to demonetisation, a verification checklist of cash deposits has been prepared to assist the assessing officers so that deviant cases can be taken up for further study.

The CBDT move is aimed at spreading the department’s net wide and deep to catch those who deposited unaccounted cash during demonetisation.

In this latest directive to tax officers, a 17-point checklist has been created, which has to be updated on the department’s server for further action. All unaccounted cash deposits made between November 9, 2016, and December 31, 2016, will be examined as part of this plan.

The checklist also says that if a taxpayer disputes the amount, the correct amount has to be mentioned after checking with the bank.

The particulars in the checklist are — return filing compliance, the total income of the taxpayer in 2016-17, gross total income (including exempt income) of the taxpayer in FY 2016-17 and percentage of cash deposit to gross total income (including exempt income).

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This move is aimed to catch those who deposited unaccounted cash during demonetisation. Pixabay

The assessing officers will have to check on the checklist with regard to the nature of deposit on assessment of the explanation provided by the taxpayer and the quantum of unaccounted deposits as determined by the assessing officers.

On the response side, they have to file if the explanation was acceptable, partially acceptable or not acceptable. The nature of the deposit option could be sale or advance for sale of land or any other capital asset, gift, repayment of loan and cash in hand.

Some other verification checkpoints are whether the quarterly VAT return is revised in the post-demonetisation period, if small part of the cash is deposited in or withdrawn from the bank despite having huge cash in hand, if there are large changes in the purchase and sales figures between the original and the revised VAT returns and if the changes are for genuine reasons.

The assessment procedures as per the checklist are — if the books of the accounts have been rejected, if additions have been made u/s 68 to 69D and if tax is calculated as per section 115BBE and if penalty u/s 271AAC has been levied.

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On November 8, 2016, the Government of India had announced demonetisation of all Rs 500 and Rs 1,000 banknotes. Pixabay

The examination of monthly cash sales and cash deposits lists the period from April 2015 to November 8, 2016.

Also Read: Gold Price May Increase to Rs 40,000 per 10 Gram by Diwali

On November 8, 2016, the Government of India had announced demonetisation of all Rs 500 and Rs 1,000 banknotes. It also announced the issuance of new Rs 500 and Rs 2,000 banknotes. (IANS)