Old currency notes for new: what you should know

With the demonetisation of Rs500 and Rs1,000 notes, many people are confused about how to get hold of some usable cash. Bank officials have said only Rs100 notes would be filled into ATM machines since the new Rs500 and Rs2,000 rupee notes have a different size incompatible with the cash trays and the machines would have to reconfigured before these new notes can be brought in.

While shutters were up in some though not all ATMs today, lack of cash led to customers scurrying from one ATM to the other in search of cash. A lot of the ATMs had already run out of cash by afternoon. Full-fledged operations will take as many as 10 more days.

The best time to visit the ATMs is either early in the morning or after midnight, as this is when they are likely to have a fresh supply of cash. Each debit card has a withdrawal limit of Rs2,000.

Alternatively, you can withdraw money from your bank by using a cheque or a withdrawal slip.

As for deposits, there is no limit to the amount you can deposit in the bank where you have an account, but the income tax department will keep a tab on deposits which can't be explained, though, there is no tax to be paid on deposits less than Rs2.5 lakh.

While depositing or exchanging your notes at the bank, if you are asked to provide a copy of the ID card and or the PAN card, make sure you attest the same and also mention the amount being deposited as well as the date. There are chances that PAN and ID proof copies without signatures may be circulated and photocopied several times. So take this precautionary step to ensure that your ID details are not misused by anyone.

For people who do not have a bank account or valid ID proof, the older notes can be transferred to a third-party account. An authorisation in writing is required giving the third party permission to deposit cash in their account. If your relative or friend has an account, you can also get the old notes exchanged into that account, provided the third party gives you permission in writing.

You can also exchange up to Rs4,000 per day by filling a simple form and providing an ID proof to the bank. This could be done at any bank irrespective of whether you have an account there or not.

If your 'know your customer' (KYC) norms are up to date, there is no limit on the quantity and value of older notes that you can put into your account. However, where the compliance with KYC norms is incomplete, only a maximum of Rs50,000 can be deposited only. So please ensure that all your KYC formalities are up to date.

Notes can only be exchanged or deposited till 30 December. In case of failure to exchange these notes before the deadline, you will have to contact Reserve Bank of India offices and provide necessary documentation as specified by it. You will then be given an opportunity to deposit your money at specified offices of the RBI till 31 March.

While demonetising the high-value currency notes on Tuesday, the government had permitted people to use such notes for payment of certain services like rail and metro ticket, rail catering, airline ticket, buying LPG cylinder and medicines with doctor's prescription. Delhi Metro will also accept the older notes till 12 November. Old notes can also be used to pay water and electricity bills.

Avoid trying to deposit large amounts that do not match your income.  This would be treated as the case of tax evasion and the tax amount, plus a penalty of 200 per cent of the tax payable, would be levied as per the section 270(A) of the Income Tax Act. In case of any query, you may approach the control room of RBI by email or phone. You can mail to publicquery@rbi.org.in or call 022 22602201 / 022 22602944.

Finance minister Arun Jaitley has said that deposits of now-defunct old Rs500 and Rs1,000 currency notes in bank accounts will not enjoy any tax immunity. So if you are thinking of going to a money exchange or buying gold from the bullion market with old notes, please be aware that the taxmen have their eyes everywhere. The transactions will be under the I-T lens anything over Rs2.5 lakh.

Starting today, banks are open till Sunday. They will remain open from 8 in the morning till 8 in the evening to assist customers. All charges pertaining to cash deposit into one's accounts will be waived till 30 November and the fees for transacting at ATMs will also be scrapped till 31 December.