Indian state’s income tax department probes potential illicit scheme involving ₹2000 note exchange

The Income Tax Department in Bhubaneswar is set to investigate a suspected illicit scheme involving the exchange of discontinued ₹2,000 notes at a Reserve Bank of India (RBI) office. Individuals reportedly hired on commission have been noticed in queues for two consecutive days at the RBI office, each exchanging these notes for a commission of around ₹300. The individuals are seen transacting up to ₹20,000, raising suspicions of tax evasion by those orchestrating this operation. The department anticipates challenges in identifying those still holding large amounts of ₹2,000 notes and exploiting impoverished individuals from slum areas for these illegal exchanges. An inquiry by the Economic Offense Wing (EOW) of the Crime Branch also suggests possible tax evasion. Nevertheless, EOW’s action remains limited until they uncover evidence of criminality.

Earlier this week, in response to RBI’s decision to discontinue ₹2000 notes by October 7, large crowds have been assembling at the RBI office in Bhubaneswar for currency exchange. Daily exchanges involve around 700 individuals and amount to ₹1 to 1.5 crore. Despite this, about ₹12,000 crore of these notes remain in circulation as Governor Shaktikanta Das disclosed at a Monetary Policy review meeting. Investigations by the Economic Offense Wing and ED arose due to allegations of daily wage laborers receiving commissions for these exchanges.

The ₹2000 (approx. $24) note was introduced in November 2016 to meet the currency requirement after the withdrawal of ₹500 and ₹1000 notes but was discontinued in 2018-19 when other denominations became sufficiently available. Sarada Prasana Mohanty, Regional Director of RBI, confirmed this information.

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