[abraham_s]

500 and 1000 Ruppee note cease to be legal tender as of today midnight. Everyone who has them can get it exchanged for 100 ruppee notes in banks,post offices etc until Dec 31. You need to provide a valid id to do an exchange, which means that the transaction will be traceable and Income Tax department (Indian version of IRS) will be matching them to declared income. ATM and banks are closed for the next couple of days.

Essentially people hoarding black money in 500 and 1000 ruppee denomination will be stuck with this money as they can't exchange them. (money obtained via undeclared/not-taxed transactions. One common method is show a lower amount in the legal documents. For example show that land/house is being purchased for 100K$ on documents while paying say 300K $ thereby evading tax on 200K $, but with the side effect making 200K$ black money). This is also slow down spread of fake currency in the country. (Only temporarily until fake of the new notes are created).

Having lived in India for most of my life makes me take a slightly pessimistic view of this measure

+ Small scale hoarders of black money will be affected by this move. + Once you cross a certain wealth, hoarding cash is impractical, so you start investing in land,gold etc. Those people will not be affected by this measure.

+ Average citizen will be inconvenienced. I can see the long lines forming at the banks for the new few days as people scramble to get the notes changed. Not to mention people who are travelling etc, who might be having no money except for the discontinued notes and no way to get more money for the next two days.

+ There will be attempts to circumvent this. I guess there will offers of "exchange x amount and get y % of it" given to middle to low income people in the coming days. But it is hard to scale this, so it wont affect the efficacy of the measure. + I have a hard time believing that the people close to the current Prime Minister / Government didn't know this was going to happen. (If this measure wasn't carefully planned not to affect "friends" of the current administration(look up Adani Group), I would be greatly surprised and will change my opinion about the current Prime Minister)

edit: added one bullet point

[mridulmalpani]

> (If this measure wasn't carefully planned not to affect "friends" of the current administration(look up Adani Group), I would be greatly surprised and will change my opinion about the current Prime Minister) - I agree with you , but nobody knows the truth.

[twblalock]

I would imagine that most of the wealthy Indian tax evaders have their money in Swiss bank accounts rather than large stacks of rupee banknotes hidden in their basement.

[intended]

Most wealthy tax evaders have long since brought their money back and laundered it already.

Tax Windows have been open for a long while, people seem to forget that there's been multiple amnesty Windows, the oldest being in the 90s iirc (could be late 80s).

[abraham_s]

There was a amnesty window open a few months back. I recall seeing an ad for a no questions asked amnesty with 50% and so tax rate.

[abraham_s]

Yes. This is going to affect tax evaders on a lower spectrum of wealth. Those who aren't wealthy enough to have offshore accounts.

Even that is a step forward.

[pavanred]

How do you invest in land/gold without paying taxes? And, one is required to have the PAN (Permanent Account Number) to transact in gold/land, no?

[leafee]

There is an official transaction, but only for a fraction of the real transaction. The other fraction is done in cash.