Demonetisation: As Parliament logjam continues, PM Modi holds Cabinet meet; may announce new deposit scheme

New Delhi: Amid uproar and adjournments in Parliament over demonetisation move, PM Narendra Modi convened a Cabinet meet at Parliament Library building on Thursday.

PM Narendra Modi had called Cabinet meeting possibly to discuss the penal 200 per cent tax that is keeping away the scrapped 500 and 1000 rupees notes from entering the formal system.

The meeting, summoned at a very short notice, comes amid reports of high tax penalty terrifying people from putting their cash savings into the formal banking system.

Govt wants all of the 500 and 1000 banknotes to be deposited?

Sources said the government wants all of the 500 and 1000 banknotes to be deposited and not burnt or destroyed for the fear of penal action.

The Income Tax Department had previously warned that cash deposits above Rs 2.5 lakh threshold post demonetisation decision could attract tax plus a 200 per cent penalty in case of income mismatch.

It was stated that the department was tracking all cash deposited during the period of November 10 to December 30, 2016, above a threshold of Rs 2.5 lakh in every account.

This had put a fear in people with reports of the banned currency even being destroyed.

Govt to come out with a deposit scheme?

Sources said the government may come out with a deposit scheme or an instrument like bond where the cash savings in the banned notes could be deposited.

Modi's November 8 shock ban on high-denomination currency notes had swept away 86 per cent of the currency in circulation in the biggest ever crackdown on black money, corruption and counterfeit currency. The move had led to Rs 14 lakh crore worth currency being withdrawn from circulation.

A 50-day window was given to holders of the old currency to deposit in their bank accounts. But the penal tax provisions were deterring many.

Rajya Sabha adjourned 

Earlier, in the day, the Rajya Sabha adjourned for the day amidst ruckus over demonetisation by the opposition at around 3.00 p.m., shortly after the house met after another adjournment in the post-lunch session.

As the house re-assembled post-lunch at 2.00 p.m., the opposition demanded Prime Minister Narendra Modi's continued presence in the house. 

PM Modi had come to the house at 12.00 noon and sat for an hour. However, he did not return after the lunch break.

Amidst ruckus by the opposition, Deputy Chairman P.J. Kurien, who was in the chair, adjourned the house until 3.00 p.m.

As the house met at 3.00 p.m., the opposition persisted with its demand for Modi`s presence in the house during the discussion on demonetisation.

The government accused the opposition of running away from discussion.

As the opposition members trooped to the well of the house, raising slogans against Modi, the chair adjourned the house for the day.

(With agency inputs)