Depositing old currency notes won't provide relief from taxation: Jaitley

Finance Minister Arun Jaitley today said that deposits of the no longer functional Rs. 500 and Rs. 1,000 currency notes in bank accounts will not enjoy immunity from tax.

After the government's decision of withdrawing Rs. 500 and Rs. 1,000 banknotes to curb black money, corruption and counterfeit currency, Jaitley said that higher-denomination currency notes have to be deposited in bank accounts to get newer or smaller denomination currencies.

"Depositing the old currency notes in the banks will not provide any relief from taxation," said Jaitley.

"If the money is legitimate which had been previously withdrawn from bank or earned legally and saved and had been disclosed, there is nothing to worry about," he told DD.

The Finance Minister further said that housewives and farmers with genuine savings need not worry about depositing cash in their bank accounts.

"The small amounts that people will deposit like Rs 25,000, 30,000 or 50,000 lying in house for expenses, or whatever money could be there for meeting normal expenses should not worry," he said.

"They can go to banks," he added.

He further said the government's move will promote more and more digital transactions.

"Obviously there are some inconvenience for a couple of days or couple of weeks but those inconvenience cannot be alibi that India continues to live (with black money and parallel economy)," Jaitley said.

"The decision would bring more transactions under tax net and both direct and indirect taxes would move up. Reduction in parallel economy would increase the size of formal economy," he added.