'I was shocked when my receptionist asked me what to do with her Rs 70 lakh cash lying at home.'
'My next-door grocery store owner asked me for a way out for the Rs 45 lakh cash lying in his locker,' says a CA who asked not to be identified.
Dilasha Seth and Ajay Modi report.
Illustration: Uttam Ghosh/Rediff.com
The temporary demonetisation of currency last week has not only led to long queues outside banks and ATMs, but also outside the offices of chartered accountants who are inundated with queries from their clients, distant relatives, receptionists and even the owner of the next-door grocery store.
Amid persistent fear of prosecution and penalty, people across income classes are looking for ways to do away with stacks of higher denomination currency.
When Ravi Kumar (name changed), a South Delhi-based senior corporate executive, called a leading CA to help him settle his NRI friend's Rs 40 lakh (Rs 4 million) cash, the CA, in a hurry, asked him to only contact him if he has more than Rs 1 crore (Rs 10 million).
But there are CAs entertaining queries for lower amounts as well.
A Delhi-based CA said queries received from clients and non-clients related to amounts between Rs 5 lakh (Rs 500,000) and Rs 20 lakh (Rs 2 million).
A CA said many businessmen are reworking their returns to show bigger income and profit.
Returns can be filed without the balance sheet and so there is no need to make any change in the balance sheet.
A lot of people also seem to be using personal contacts with CAs to overcome the challenge.
"I was shocked when my receptionist asked me what to do with her Rs 70 lakh cash lying at home. My next-door grocery store owner asked me for a way out for the Rs 45 lakh cash lying in his locker. It was surprising to know they could have so much money with them," said a CA who asked not to be identified.
The fear of penalty is such that a person who paid an advance of Rs 20 lakh in cash has asked the seller to keep the money and the property, said a CA.
Rahul Garg, leader (direct taxes) at PwC, said while people recognise they will be liable to penalty, but there are unsure of the quantum.
While the revenue secretary has said the penalty would be to the tune of 200%, the income tax legislation talks of a 50 to 200% on a case-by-case basis.
Most official queries are from businessmen alone. A CA said there were two categories of businessmen: One who is running losses but show profit in books to ensure that banks don't close the credit line. The other is the one who shows a lower profit to avoid tax.
It is the second category of businessmen who are badly hit. He cannot show this money in his account now.
In the case of small businessmen, such amounts would run into several lakhs of rupees; these would be a few crores in case of mid-size businessmen, he said.
The second category of businessman is also being advised to identify family members and relatives to use their accounts to deposit up to Rs 250,000 per account.
These arrangements are being done at a cut of 10% to 15%, said a CA.
Those with bigger unaccounted cash might not be able to save all the money in spite of trying various combinations.
The worst-hit, explains a CA, are politicians and bureaucrats across the country with unaccounted cash.
They have many businessmen as friends, but the businessmen are burdened with their own cash management problems.
Neeru Ahuja, partner, Deloitte Haskins and Sells, said people should simply go and deposit the cash in banks rather than looking for convoluted ways around it.