While the pros and cons of India’s demonetisation policy are open to debate, several legal compliances were introduced that impose heavy penalties on business entities in the event of their violation.
The Central Government issued a notice under the RBI Act, 1934 that derecognized currency notes of denominations of Rupees 100, 500 and 1000 from the 8th of November, 2016. Currency holders were permitted to deposit these notes in Bank or Post Office Savings accounts till the 30th of December, 2016 and not after. A further grace period till March 31,
According to the Specified Banknotes (Cessation of liabilities) Act 2017
Employees of a company or who held
According to notifications, the Reserve Bank does not have any provision for exchange of these Specified Bank Notes outside India. Although Persons of Indian Origin (PIO) are not allowed these services, NRIs can avail these facilities up to a limit of Rupees 25,000/-
Note that tax authorities were quite happy to accept tax payments in old currency notes during the demonetisation period.
Amendment to the Companies Act
A very important amendment was made in the Companies Act, 2013 and notified in the Official Gazette on 30th March, 2017 that makes it mandatory for companies to “disclose the details of the Specified Bank Notes” transacted during the period from the 8th of November to the 30th of December as reflected in the Company’s Balance Sheet in the following format: