How Indians Covert their Black Money After Ban on Rs 500 & 1000 Notes

Indians are inventing ways to try and hide their money from the tax inspector, as the government attempts to abolish vast undeclared wealth.

The sudden announcement by Prime Minister Narendra Modi gave people only a few hours to spend or deposit 500 and 1,000 rupee bills before they were abolished.

As millions of Indians scramble to convert savings by putting them in banks, some with tons of so-called “black money” are looking for loopholes in the system.

JEWELRY

Jewelers stayed open into the early hours of Wednesday, and an industry source in Mumbai estimated that about 250 kg of gold, worth an estimated 750 million rupees at spot prices, was sold in the city within a few hours after the announcement.
The source added that jewelers were paid anywhere between 20 and 65 percent above the going rate by buyers snapping up the precious metal with old notes.

WEDDING INDUSTRY

Retailers and wedding planners say they have been bombarded with frantic calls from people looking to buy large-item purchases from anyone willing to accept the old notes.

According to reports, In Mumbai, a senior marketing executive that organizes large weddings was debating with his company whether to accept payment in the old money.

People are quoting 30 million rupees ($450,000) in (old) 1,000 rupee notes which is not unusual for a wealthy Indian family’s wedding celebrations. There is loads of black money.

RELATIVES AND FRIENDS

Some are looking up friends, domestic staff, and even senior citizens who are prepared to legally exchange the cash in small denominations.

Banks have to report to tax authorities anybody depositing over 250,000 rupees ($3,765) and being found to be holding undeclared cash can lead to a penalty of 200 percent of the tax owed.

TRAIN TICKETS

Many unusual methods of exchanging cash are being talked about on social media.

One tweet described how people were paying their travel agents for expensive first-class train tickets with old bills and then canceling them later to get reimbursed in the new currency.

State-run Indian Railways still allowed to accept the old notes but officials have caught on to some schemes.

The railways will refund tickets worth over 10,000 rupees booked on November 9, 10, and 11, but not in cash; refunds will be done through cheques or bank transfers.

Anil Kumar Saxena, the spokesman for Indian Railways, said ticket purchases for first class, air-conditioned compartments, the most expensive category, had increased suddenly.

WATCH: Millions Are Watching This Man Wash A Rs. 2000 Note

MULTIPLE BANK ACCOUNTS

A senior citizen in Mumbai with around 500,000 rupees in undeclared cash told Reuters that she split up the amount and opened bank accounts for four of her domestic workers.

“For smaller sums, there are ways to change the money,” a partner at an investment firm told Reuters.