India Removes High-Value Notes from Circulation

November 9, 2016 Taxation in India

High value notes in IndiaNEW DELHI – India is hoping that removing certain high-value bank notes from circulation will help eradicate tax evasion and funding of terrorism.

At midnight on November the 8th India will drop INR 500 and INR 1 000 banknotes from circulation.

The move to withdraw the large denomination notes from circulation is intended to bring in significant levels of hidden wealth back into the formal economy.

The withdrawal is also aimed at hampering the capabilities of militant groups to fund their activities, and to undermine the capability of small businesses to evade their tax obligations.

It is believed that as much as 40 percent of the national economy of India is comprised of small- and medium-sized businesses which predominantly operate in cash, and, often, without reporting their profits to authorities.

Explaining the overall need to remove the high-value notes from the economy, the Prime Minister Narendra Modi claimed that “…black money and corruption are the biggest obstacles in eradicating poverty.”

It is expected that banks in India may be closed for several days following the announcement as they remove the notes from tills and ATMs.