Cash Crackdown Escalates: India May Impose 60% Tax On "Unaccounted" Deposits, Curbs On Gold Holdings

Tyler Durden's picture

As reported yesterday, India's unexpected crackdown on "black money" which saw the elimination of the old high denomination bills, is not going well, not only because former PM Manmohan Singh slammed the idea warning it would cut as much as 2% from the GDP of the world's fastest growing economy, but because so far the voluntary participation in the "exchange" of old for new notes ahead of today's exchange suspension (deposits of old cash may still take place until December 31) has been far below expectations.

As a result, the government is taking even more aggressive steps to part savers with their allegedly "laundered" cash, and as the Indian Express reports, Mody's cabinet discussed amending laws to levy close to 60% income tax on unaccounted deposits in banks above a threshold post demonetisation of high-denomination currency notes. "The move comes amid banks reporting over Rs 21,000 crore being deposited in zero-balance Jan Dhan accounts in two weeks after the 500 and 1,000 rupee notes were banned, which authorities apprehend may be the laundered black money."

IE sources said the government was keen to tax all unaccounted money deposited in bank accounts after it allowed the banned currency to be deposited in bank accounts during a 50-day window from November 10 to December 30. The Indian paper adds that there was no official briefing on what transpired in the meeting that was called at short notice as Parliament is in session, further suggesting that the Modi government is indeed panicking, and scrambling to come up with legislation on the fly to demonetize India's mostly-cash rich population.

There have been various statements on behalf of the government ever since the demonetisation scheme was announced on November 8, which has led to fears of the taxman coming down heavily on suspicious deposits that could be made to launder blackmoney.


Officials have even talked of a 30 per cent tax plus a 200 per cent penalty on top of a possible prosecution in cases where blackmoney holders took advantage of the 50-day window for depositing the banned currency.

Reprotedly, in the government's scramble to sequester cash, the government plans to bring an amendment to the Income Tax Act during the current winter session of Parliament to levy a tax that will be higher than 45 per cent tax and penalty charged on blackmoney disclosed in the one-time Income Disclosure Scheme that ended on September 30. As for those blackmoney holders who did not utilise the window, they would be charged a higher rate which could be close to 60 per cent that the foreign blackmoney holder had paid last year.

But wait, there's more.

Recall, that as per our report last night, one of the reasons proposed for the recent tumble in gold has been speculation that India may ban gold imports. As a reminder, gold has traditionally been a widely-accepted cash alternative in an economy where gold has long held a supremacy over cash equivalents, to the point where recently the government started paying a dividend to those who deposit their gold to local banks for "safe keeping."

Well, it now appears that the government is taking its crusade against gold one step futher, and according to a report by NewsRise, the Indian government may soon impose curbs on domestic holdings of gold as Modi intensifies his war against "black money", news agency NewsRise reported.

As we reported previously, gold prices have soared in India ever since the November 8 demonetization announcement, and premiums jumped to two-year highs last week as jewellers ramped up purchases on fears the government might restrict imports after withdrawing higher-denomination notes from circulation in its fight against black money. 

India is the world's second biggest gold buyer, and it is estimated that one-third of its annual demand of up to 1,000 tonnes is paid for in black money - untaxed funds held in secret by citizens in cash that don't appear in any official accounts.  

The move to withdraw higher denomination notes has already started to disrupt cash-based gold smuggling, officials have said.  Scrap gold supplies were also set to halve this quarter as the cash crunch and falling prices make it difficult for consumers to liquidate their holdings.

If the past is any indication, such escalations by the government will only make it even more attractive for the local population to hold gold as a safe "alternative" to cash, which as the past month has shown can be stripped of its value overnight, and will ultimately lead to even greater gold smuggling by the local population, resulting in another spike in the current account deficit, something which has plagued previous administrations, who have repeatedly looked for ways to prevent hot money outflows from the Indian economy.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
de3de8's picture

Not gonna end well

Paul Kersey's picture

The 1000 rupee note is worth less than $15 USD. The Indian Government is confiscating the wealth of some of the least wealthy people on earth. This is government by insanity.

illuminatus's picture

Nothing insane about it, these people are criminals. This is the parasite class.Gangsters that need to finally be brought to justice for robbing people of their wealth.

wildbad's picture

same thing with digital fiat. this is only to the advantage of those who would control every aspect of our lives.

noone wants it but them.

resist it everywhere vocally and practically

cashless = fredomLESS

VinceFostersGhost's picture



Curbs On Gold Holdings


What gold?


I have a boat......wish I had some gold.


These are not the droids you're looking for.

Scarlett's picture

To have custody of one's own money is a civil right, and if they take that away, don't be surprised when we migrate to guns and ammo and go wallstreetpro2.

Ghost of PartysOver's picture

India's Class System is alive and well I see.

bka's picture

The most parasite class Gangster in India are the politicians (including ruling elite in the Govenment) themselves.  They cannot touch super rich who are there donors. They want to bring more into tax net work from working and middle class.  At least out of this more tax collection, something will go into their pocket to make their bottoms bigger - All these people are thives and dirty -white collar robbers and plunderers 

illuminatus's picture

Let me clarify. I mean Modhi and his bankster buddies need to be taken out.

theorist's picture

That is crazy talk. The big gangster and criminal types have probably already pushed their money to a safe place, out of reach and sight fo government. There is enough corruption in the Civil Service and government that all those who matter will have already converted their cash and moved it. It is, in fact, the poor and uneducated who have no bank accounts who have probably lost their life savings. The government, as always, has behaved in such a wayas to demonstrates that it is out of touch with the society it is governing. This whole thing makes India look like a tin pot country.

Yukon Cornholius's picture

Indian Prime Ministers have been killed for doing a lot less than modi has done. He is certainly no friend of the people's.

DjangoCat's picture

Ill in the mind you are.  Fuck you too.

Pumpkin's picture

Government by satanists.

StagStopa's picture

Wrong, pumpkin. India could use some Old Religion. We believe in retribution and revenge, when warranted, and in accordance with the law of Karma.


rrrr's picture

Religion and Karma are unnecessary. People just need to conduct themselves as agents of natural extinction.

Mustafa Kemal's picture

"Religion and Karma are unnecessary."

Religion maybe, Karma is just the law.

smokintoad's picture

There will eventually be a ban on having any shirt on your back, much less having one made of gold.

WestVillageIdiot's picture

I believe the man with the gold shirt was killed several months back.  So, that ban seems to already be in place. 

rrrr's picture

They won't be happy until they make it illegal for us to have locks on our doors.

smokintoad's picture

It's an unfolding modern fairy tale.  The "Fed Director's New Clothes."  

We're at the point where little Tyler's yelling that he's naked but most of the "adults" are still too scared to admit it.

MFL5591's picture

Whatever it takes to help the US Wall Street Criminals and Federal Reserve Criminals take Gold and Silver down.  If they need to use other countries, no propblem, just use derivatives to destroy yet another currency with our fiat dollar fraud!

DjangoCat's picture

Let them take it lower, we can buy it cheap.

Stu Elsample's picture

unarmed peasants have no choice

NoDecaf's picture

They don't need weapons, just cook those fuckers, plenty of curry there to flavor them up.

WestVillageIdiot's picture

Prime minister tikka masala over rice with some naan or roti.

VinceFostersGhost's picture



Brexit.......Trump.......war on politicians worldwide.


You bitchez had better go underground!


One more thing.......Pizzagate........NOT going away.



Al Huxley's picture

The NYT told me it was 'Fake News' (they sure jumped on the Fake News tag quickly) - of course they didn't explain why I should ignore so many disturbing indicators, like

- the remarkable similarity between the Podesta brothers and the police sketches of the two persons of interest in the Madeleine McCann abduction

- The Podesta brothers ongoing association with known and convicted pedophiles, including Clement Freud, who's villa was in close proximity to the location of the McCann abduction

- The bizarre e-mails from Wikileaks, referring constantly to things like 'hankerchiefs with maps that appear pizza related', being given a nice pasta for a christmas present (really - 'pasta' - not, 'lasagna, or linguini, or cannelloni, just 'pasta'?)

- The instagram photos of children with pedophile-code hashtags

- Tony's affinity for artwork depicting children in various states of peril, photos of 'naked teens in their parents homes', etc


Still, they're professional reporters, so I'm sure that the above is all just irrelevant and not even worth looking in to.  The important thing is that we know that if it doesn't come from the NYT it can't be true.  Fuckheads.

DjangoCat's picture

These aren't the droids you are looking for, move along now.

New World Chaos's picture

A serf would have been arrested if there was even 1/4 as much evidence as there is against Podesta.  Assuming the serf isn't a Muslim, of course.

Silly plebs trying to keep it private.  Best way to be a pedo is to attend a satanic orgy with the political elite.  Pass kids around like they're joints.  Make sure the top judges and media execs are in on it too.

Reginald Blome's picture

Many years ago I had my WiFi configured as open when I was living in an apartment complex. Long story short , one day over a year after I moved out, TEN armed Leo's show up in full on swat gear banging on my door at 4 in the morning , ready to break it down. They took me to the station and took all my computer equipment... turns out someone was involved in child porn and using my router.

I love how as a peon, had there been even ONE semi-questionable pic I'd probably still be in jail, but those fuckers... not even an investigation ! 

Some animals more equal than others and all of that. Disgusting.

ZeroPoint's picture

Like Gerald Celente says: If you have nothing left to lose, you lose it. If they charge down the houses of these psycopaths, and the government opens fire on them, then it's over for the goverment.

Honestly, I think India's suddenly declared war on cash is more likely the government is about to go belly-up and they are desperately seeking funds to keep the ponzi afloat a little longer.

Granted, central bankers don't like anyone having cash, but I think in this case it's more about funding the government.


East Indian's picture

Some Indian states have surprising numbers of illegal guns (India has a license system for guns); and village locksmiths make their own firearms! some of these weapons are quite sophisticated. With the Punjab militancy (1980 - 92), knowledge of AK 47 has also spread. There are enough lathes and CNCs around. 

But Indians rarely rebel - they find out ways to fool the rulers, that is why the Indian bureaucracy is corrupt - it colludes with people against the government. Only when they are very desparate they rebel. And their rebellions have to be put down with quite some force. The Punjab militancy was put down by arming the whole population illegally, and letting them kill each other till they were all tired. The Assam revolt (1980 - 85) was quelled with political concessions. There are perennial left wing extremists in many states. 



Grinners's picture

EI wasn't Modi revered as some kind of saviour when he was elected not that long ago? WTF happened?

East Indian's picture

He is still the 'saviour' for the urban middle class and the super- rich. They are worshipping him  more than ever.

DosZap's picture

Unarmed but the SHEER numbers of them would overwhelm that government in one day.

Dolus's picture

Sorry for the comment hi-jack but the font on Chrome for the website has changed for the worse. If this is on ZH side I wish they would bring the old font back. This looks like a mutated form of Calbri, not a good look. 

Dr. Engali's picture

Damned barbarians need to move into the 21st century by ditching that worthless metal and embracing the new unlimited digital money. After all our enlightened overlords know what is best for everyone.

WestVillageIdiot's picture

The masses need to recognize that freedom was a short-lived concept of the enlightenment.  There is no such thing as freedom.  There is only life to be led for the good of the government, the good of the state, the good of the apparatchiks that run the machine.  All else is simply folly.

Al Huxley's picture

Exactly.  That way those trustworthy guardians of society in the government can make sure it's properly distributed to those in need - especially those other pillars of society, the financial institutions, when they fuck things up.  Seriously, how the fuck is the upper class expected to steal from the poor and the middle class if the poor and the middle class refuse to keep their money in digital form like civilized people.  Are the rich actually expected to go door-to-door with a fucking bag and check under mattresses?  Important step for India into the modern world.

Bwana's picture

I would like to know how well digital money would survive a "Carrington Event" or an "EMP" From what I have read a Carrington Event is a real possibility which may occur tomorrow or not in our lifetimes. The EMP is a real possibility because the Iranian Parliament has authorized the use of an EMP on the US as soon as it is available. Both of these have the ability to fry every semiconductor that is not mil-spec hardened or inside a Faraday cage. 

Dsarango's picture

This is not going to end well. When they ask you if you should buy indian stocks?



Impoverished Psychologist's picture

The more desperate the moves this government makes just serve to demonstrate that the central economy is knackered. If the mainstream economy was any good, people would particpate in it wouldn't they?

Instead they are now hiding in the fringes in cash,gold,bitcoint W.H.Y...

Healthy economies don't do this, economies under acute stress do, (wartime, totalitarian govt, endgame etc)

WestVillageIdiot's picture

The article notes that India is the second fastest growing economy in the world.  Just think what these maniacs will try during a panic, ummm I mean depression, ummm I mean recession.  What word are we using nowadays for economic disaster?  I forget what is politically acceptable.  Somebody wake Krugman up and ask him what the head-up-their-ass crowd is now calling depressions? 

Secret Weapon's picture

This is not taxation - it is purely theft.

BorisTheBlade's picture

Grand experiment on the poorest. Not too long before a major unrest comes. One should suspect war will follow to distract most populated country, I'd be glad to be wrong.