Rahul Mehta Gandhinagar LsCandidate

How CAs have planned to circumvent withdrawal limit of Rs 20000 per week - using gold and taking cheque to buy gold and then sell gold to for old notes !!!
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IOW, CAs are planning to convert all old Rs 500 notes into gold !!! Loss = about 10% to 20% !!! Govt gains = mere 2% to 3%. Some 2% will go to gold sellers and rest goes to poor..
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The mechanism exploits following fact
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Today, if you are willing to sell gold for old Rs 500 notes, you get Rs 3500 per gram (Rs 5000 in mumbai !!!)
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And today, if you are willing buy gold for demand draft, you get 1 gram of gold for Rs 3000 across India.
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Say X has Rs 500 notes worth say Rs 1 crore.
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Say Y has 5 family members and Y's annual income of Rs 80000 per year cheque and other members earn Rs 0 cheque. (they may or may not have some small cash incomes). Say name of Y's family members is Y, Y2, Y3, Y4 and Y5.
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Say Y has gold of 10 grams.
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step-1 : Y can sell that 10 gram of gold for old cash notes for Rs 3500 per gram for Rs 35000 total. So he buys that gold using some loan etc.
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step-2 : Y can deposit the cash in bank and show as income earned from job work in diwali.
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step-3 : Y can get demand draft of Rs 30000, and Y can buy 10 gram of gold using that demand draft.
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step-4 : Y can repeat step-1 to step-3 four times on 4 consecutive days. and thus deposit Rs 140,000. So total income of Y = Rs 220,000 per year, which is 100% tax exempt !!!
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step-5 : Y can take this steps for his family members Y2, Y3, Y4, Y5 and thus convert Rs 800,000 of old Rs 100000 notes into gold !!! If
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So X's old Rs 500 notes worth Rs 10 lakhs got converted into gold worth Rs 10 lakhs using one family of 5 members and mere 10 grams of gold, within say 20 days.
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If X has 50 gram of gold, Rs 10,00,000 of old notes can be converted into gold within 5 days !!!
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Pls note --- more the gold, lesser the number of days.

But per person amount remains same = Rs 200,000 per family member (Rs 400,000 for person above 80 years) !!!
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IOW, the limit of withdrawal of Rs 20000 per week will be circumvented by asking banker to print demand draft to purchase gold !!!
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The govt will gain only 1% VAT and 1% excise on gold i.e. about Rs 20000 when this Rs 10,00,000 of old notes gets converted into gold
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And poor will ear some 20% i.e. some Rs 100,000.
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Not bad, A good diwali gift from NaMo to all poor and lower middle class in India .
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Is this viable as a large scale?
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Total value of gold in India = Rs 60 lakh crore (20000 tonne)
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Total cash in India = Rs 17 lakh crore
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Say some 2 crore families of 5 members have cheque income of below Rs 100,000 per year. Say each has family has mere 10 gram of gold = 20 crore gram = 20,00,00,000 grams = 200,000 kilo = 200 ton = 1% of total gold in India.
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Then that family can show additional cash income of Rs 900,000 ( to Rs 12,00,000 as senior citizens have higher exemption).using above means.
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So by using these 2 crore families, the black money hoarders can convert ALL their old cash into gold within 15 days to 20 days !!! And old cash will land into bank via these middle
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So value of gold will shoot up. Smuggling will increase by several times.