KOCHI: Was there a delay in debiting the cheque payment you made for a service from your account? It may not be because the party did not want to encash the cheque immediately. It could be a small, innovative way to beat the demonetisation. The smart Keralites are using ‘cash cheque’ given by reliable customers as ‘high value legal tender’ in certain sectors in the absence of hard currency in the market. “I’d given two cash cheque, Rs 10,000 each, to a building material supplier in the second week of November because of the restrictions imposed on bank transactions by the Central Government as part of demonetisation,” said Bijoy V G, a private company staff. “But money was debited from my account only recently.
His reason for delay in withdrawing the amount surprised me. He handed over the cheque to at least a dozen people in his trade circle as high value legal tender,” he said. “I need at least `2-3 lakh hard currency to collect material from manufacturers. But it’s almost impossible for us to have that amount of hard cash in hand because of demonetisation.
So, we have started using the ‘cash cheque’ given by reliable customers as a legal tender in our circle,” said Sunilkumar K, (name changed), a building material trader. He explained the modus operandi. “This way, we don’t need to pay fees and tax for transactions - banking or digital. But there is a risk in this transaction. If the cheque is bounced, it will take a circuitous route to find the original owner,” he said.
V K Vijayakumar, investment strategist, Geojit BNP Paribas Financial Services Limited, said the method was illegal. He said a cheque - cash cheque or account payee - issued in favour of a particular person could not be handed over to another person. “These methods can also be interpreted as ways to evade tax as a majority of small and medium enterprises in the organised and unorganised sector have been evading tax in a big way,” he said.