In a fresh crackdown on black money, the government has passed an ordinance which makes it illegal to hold old ₹500 and ₹1,000 currency notes post 31 March.
The ordinance called the 'The Specified Bank Notes Cessation of Liabilities Ordinance' seeks to impose a penalty, including jail term, for the possession of the scrapped notes.
The penalty for holding old currency in excess of 10 notes may include financial fines and a jail term of up to 4 years in certain cases.
Furnishing wrong information while depositing the old currency between January 1 and March 31 will attract a fine of Rs 5,000 or five times the amount.
Sources said the proposal put to the Cabinet was for a four-year jail term for anyone possessing a number of demonetised currency after March 31, 2017, but it was not immediately clear if it was approved.
The ordinance will, however, have a clause allowing the people to deposit scrapped notes at the RBI branches, as promised by the government, after giving reasons for doing so.
The Cabinet headed by Prime Minister Narendra Modi also approved amending the RBI Act to extinguish the liability of the government and the central bank on the demonetised high-denomination notes to prevent future litigations.
The Ordinance will have to sent to the President and after his assent will come into force.
The government had been mulling the move over the past few days. The executive order seeks to impose fines on people in possession of old scrapped ₹500 and ₹1,000 notes.
In 1978 a similar ordinance was issued to end the government's liability after Rs 1,000, Rs 5,000 and Rs 10,000 notes were demonetised by the Janata Party government under Morarji Desai.
(With inputs from agencies)
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Ordinance Declares Owning Old ₹500 And ₹1,000 Notes After 31 March Illegal