Amid Rs 2,000 Deposits, PAN Details Necessary For Deposits Above Rs 50,000
On 19 May, the Reserve Bank of India (RBI) made an announcement stating that Rs 2,000 currency notes would be removed from circulation.
It stated that existing notes can be either deposited into bank accounts or exchanged until 30 September.
The RBI clarified that Rs 2,000 notes will still be considered legal tender. Various government and private banks have provided explanations about the process of exchanging these currency notes.
Customers who wish to deposit the money, rather than exchange it, should follow the usual cash deposit procedures of the banks.
The central bank added that banks will have their own processes and rules for exchanging Rs 2,000 notes.
However, there is no limit on the amount that can be deposited in a customer’s bank account. Know your customer (KYC) norms will apply to deposits.
This means that the current income tax requirement of providing a permanent account number (PAN) for deposits of Rs 50,000 or more in bank accounts will also apply to deposits of the withdrawn Rs 2,000 notes.
Furthermore, the RBI informed the Delhi High Court that the withdrawal of Rs 2,000 notes is not a demonetisation measure, but a legal exercise carried out for operational convenience. The decision to allow their exchange was made to ensure smooth functioning of bank branches.
To avoid disruption to regular bank activities, the RBI has stated that Rs 2,000 bank notes can be exchanged for notes of other denominations, up to a limit of Rs 20,000 at a time, at any bank starting from 23 May.
The Rs 2,000 denomination bank note was introduced in November 2016 to meet the currency needs of the economy after the withdrawal of all Rs 500 and Rs 1,000 bank notes as legal tender at that time.
It also noted that Rs 2,000 notes are not commonly used for transactions. Additionally, an adequate stock of bank notes in other denominations is available to meet the currency requirements of the public.