MM TAX CLUB

₹2000 Denomination Banknotes – Withdrawal from Circulation; Will continue as Legal Tender

₹2000 denomination banknote was introduced in November 2016 under Section 24(1) of RBI Act, 1934 primarily to meet the immediate currency requirement of the economy after withdrawal of the legal tender status of all ₹500 and ₹1000 banknotes in circulation at that time. With fulfilment of the objective of introduction of ₹2000 denomination and availability of banknotes in other denominations in adequate quantity, printing of ₹2000 banknotes was stopped in 2018-19.

2. Further, majority of the ₹2000 denomination notes were issued prior to March 2017, have completed their estimated lifespan and are not observed to be commonly used for transactions anymore. Therefore, it has been decided that, in pursuance of the “Clean Note Policy” of the Reserve Bank of India, the ₹2000 denomination banknotes shall be withdrawn from circulation. The ₹2000 banknotes will continue to be legal tender.

3. Accordingly, to implement the decision stated above, the following plan of action has been formulated which, the banks shall follow meticulously

A. Handling of existing stock and receipts

All banks shall discontinue issue of ₹2000 denomination banknotes with immediate effect. ATMs/Cash Recyclers may also be reconfigured accordingly.

Banks holding Currency Chests (CCs) shall ensure that no withdrawal of ₹2000 denomination is allowed from the CCs. All balances held in the CCs shall be classified as unfit and kept ready for dispatch to respective RBI offices.

All banknotes in this denomination received by the banks shall be sorted immediately through Note Sorting Machines (NSMs) for accuracy and genuineness and deposited in the currency chests under the Linkage Scheme or kept ready for dispatch to the nearest Issue Office of RBI.

RBI Press Release dated May 19, 2023

₹2000 Denomination Banknotes – Withdrawal from Circulation; Will continue as Legal Tender

The ₹2000 denomination banknote was introduced in November 2016 under Section 24(1) of RBI Act, 1934, primarily to meet the currency requirement of the economy in an expeditious manner after the withdrawal of legal tender status of all ₹500 and ₹1000 banknotes in circulation at that time. The objective of introducing ₹2000 banknotes was met once banknotes in other denominations became available in adequate quantities. Therefore, printing of ₹2000 banknotes was stopped in 2018-19.

2. About 89% of the ₹2000 denomination banknotes were issued prior to March 2017 and are at the end of their estimated life-span of 4-5 years. The total value of these banknotes in circulation has declined from ₹6.73 lakh crore at its peak as on March 31, 2018 (37.3% of Notes in Circulation) to ₹3.62 lakh crore constituting only 10.8% of Notes in Circulation on March 31, 2023. It has also been observed that this denomination is not commonly used for transactions. Further, the stock of banknotes in other denominations continues to be adequate to meet the currency requirement of the public.

3. In view of the above, and in pursuance of the “Clean Note Policy” of the Reserve Bank of India, it has been decided to withdraw the ₹2000 denomination banknotes from circulation

4. The banknotes in ₹2000 denomination will continue to be legal tender.

5. It may be noted that RBI had undertaken a similar withdrawal of notes from circulation in 2013-2014.

6. Accordingly, members of the public may deposit ₹2000 banknotes into their bank accounts and/or exchange them into banknotes of other denominations at any bank branch. Deposit into bank accounts can be made in the usual manner, that is, without restrictions and subject to extant instructions and other applicable statutory provisions.

7. In order to ensure operational convenience and to avoid disruption of regular activities of bank branches, exchange of ₹2000 banknotes into banknotes of other denominations can be made upto a limit of ₹20,000/- at a time at any bank starting from May 23, 2023.

8. To complete the exercise in a time-bound manner and to provide adequate time to the members of public, all banks shall provide deposit and/or exchange facility for ₹2000 banknotes until September 30, 2023. Separate guidelines have been issued to the banks.

9. The facility for exchange of ₹2000 banknotes upto the limit of ₹20,000/- at a time shall also be provided at the 19 Regional Offices (ROs) of RBI having Issue Departments from May 23, 2023.

10. The Reserve Bank of India has advised banks to stop issuing ₹2000 denomination banknotes with immediate effect.

11. Members of the public are encouraged to utilise the time up to September 30, 2023 to deposit and/or exchange the ₹2000 banknotes. A document on Frequently Asked Questions (FAQs) in the matter has been hosted on the RBI website for information and convenience of the public.

Circular No.11/2023-Customs dated the 17^th May, 2023

Amnesty Scheme for one time settlement of default in export obligation by Advance and EPCG authorization holders - Notification No.32/2023-Customs dated 26.04.2023.

The Ministry has issued Notification No0.32/2023-Customs dated 26.04.2023 to amend 13 Customs notifications pertaining to Advance Authorization (AA) and Export Promotion Capital Goods (EPCG) Schemes. This is to implement the Public Notice No.02 dated 01.04.2023 notified by DGFT that has provided a procedure, under category of regularization of bona fide defaults, in which all pending cases of the default in meeting export obligation (EO) may be regularized by the authorization holder on payment of applicable Customs duty, corresponding to the shortfall in EO. Interest payable is capped at maximum of 100% of such duties exempted on which interest is payable as specified in the said Public Notice dated the 01.04.2023. However, no interest is payable on the portion of Additional Customs Duty and Special Additional Customs Duty. The authorization holder choosing to avail this procedure must complete the process of payment on or before 30.09.2023.

2. The amendments made by the Notification No.32/2023-Customs provide that in a case of default in export obligation, when the duty on the goods is paid to regularize the default in term of Public Notice No. 02/2023 dated 01.04.2023 notified by DGFT, the amount of interest to be paid by the importer shall be payable as specified in the said Public Notice dated 01.04.2023. No other change is involved.

3. It may be noted that the cases under any investigation or adjudicated for involving fraud, mis-declaration or un-authorised diversion of material and/or capital goods are not covered in the scheme. Authorization holder shall not claim CENVAT Credit or Refund, under any provision of law, of any amount on duties paid under this scheme. However, there may be cases of calculation mistakes which are to be dealt on merits. Also, the DGFT PN No. 02/2023 dated 01.04.2023 specifies the necessary procedures which would be required to be followed.

4. The Principal Commissioners / Commissioners are to ensure that the exporters approaching for paying the duty, etc. are registered with the DGFT in terms of the Public Notice dated 02.04.2023 ibid. These cases under the scheme be monitored and tracked so that there is efficient handling and expeditious closure of these old cases of bona fide EO default in a seamless manner. Suitable mechanism for this should be put in place and closely supervised by the Principal Commissioners / Commissioners.

5. This Circular may be brought to the notice of all concerned by way of issuance of standing order/instruction/ trade notice. Difficulties faced, if any, may please immediately be brought to the notice of the Board.

Income Tax Department conducted search and seizure operations on a business group operating largely in North Bengal region of the State of West Bengal. The business group is controlled by a person with an active political background. Search was also conducted on his close business associate. The group is engaged in a variety of businesses ranging from production and sale of edible Rice Bran Oil, mustard oil, De-Oiled Rice Bran (DORB), different types of chemicals and real estate, etc. A total of 23 premises spread over Uttar Dinajpur, Dakshin Dinajpur, Malda, Kolkata, Siliguri in West Bengal and Guwahati in Assam and surrounding areas were covered.

The search action revealed that the group was suppressing its yield and making unaccounted cash sales of edible Oils and DORB. Several instances of cash transactions not recorded in regular books of account have been detected during the search operation. Handwritten notes, documents and digital evidences containing extracts of cash transactions have been seized. Parallel cash books and bogus claim of expenses have also been found. Preliminary investigation has revealed unaccounted income of more than Rs. 40 crore.

Further, in search operation conducted on the close business associate of the main business group, who is a leading exporter of agro products in Malda district of North Bengal, incriminating documents against cash payments in land acquisition to the tune of Rs. 17 crore (approx.) have been found. Details pertaining to unaccounted cash receipts of about Rs. 100 crore were also found.

The search action has resulted in seizure of unaccounted cash of Rs.1.73 crore. In addition, unaccounted jewellery worth Rs.1 crore has been seized.

Further investigations are in progress.

India’s overall exports in April 2023 estimated at USD 65.02 billion; a positive growth of 2 percent.

Electronic goods, Rice, Drugs and Pharmaceuticals, Oil meals, Ceramic products and glassware and Spices registered significant increase in exports in April 2023

India’s overall exports (Merchandise and Services combined) in April 2023* is estimated to be USD 65.02 Billion, exhibiting a positive growth of 2.00 per cent over April 2022. Overall imports in April 2023* is estimated to be USD 66.40 Billion, exhibiting a negative growth of (-) 7.92 per cent over April 2022.