Demonetization is the act of stripping a currency unit of its status as legal tender. Demonetization is necessary whenever there is a change of national currency. The old unit of currency must be retired and replaced with a new currency unit. The recent demonetization was done on November 8, the PM of Indian announced a demonetization policy which made 86% of the currency in circulation invalid as a legal tender. One of the key motivations for demonetization was to flush the black money generated through tax evasion and corruption and take India towards a “CASHLESS” economy. The first Demonetization year was 1946 & the second Demonetization year was 1978. It curbs the parallel economy upon certain extents that means those people having black money and excess money in hand has to destroy or deposit in bank and if deposited in bank then the money holder must have to answer the Tax department about their source of income which quite create a detoriatic condition for the money holder to answer. Objective lies behind is” To curb black money, corruption and terrorism”. As per the current Demonetization of 500 and 1000 notes many people get aware of bank facility which gave rise to strong “BANKER-CUSTOMER” relationship. Demonetization triggers spurt in “Digital payments paving the way for India to promote Digital transaction, Gift cards, Digital wallets etc. and leads to maintenance of currency for less time in hand. It reduces terror funding because of less liquidity. New security feature becomes easier to control fraudulent activity. Hence, “CHIP” based note helps to find out huge storage and requires less maintenance. In short time it hampers Foreign customers’ belief but it increases transparency sincerity of government to re-evaluate its currency and remain the value same. It also reduces money laundering activities and reduce tax avoidance tendency. The combination of GAAP, GST and demonetization increase transparency, Government Tax collection, future GDP growth, appreciate currency value and foreign trade. Though, the people faced a lot of inconvenience owing to shortage of funds, they did not criticize the government for the move. PM of India addressed that” IT WAS A MAHAYAJNA & THEY MUST OFFER THEIR OWN AHUTI”.
