Rs 2,000 notes exchange or deposit deadline to end on Sept 30: Here's your last minute checklist

Deposit the notes: Visit the nearest bank branch and deposit the Rs 2,000 notes into your bank account.

Exchange for other denominations: Alternatively, exchange these notes for different currency denominations at any bank branch in the country.

The facility for exchanging Rs 2,000 notes is available at 19 Regional Offices (ROs) of RBI until September 30, 2023. People can also exchange Rs 2,000 banknotes at any nearest bank branch.

Though the RBI instruction clearly said that the exchange of Rs 2,000 notes across the counter should be provided without insisting on a request slip or ID proof since these notes continue to be legal tender, certain public sector banks have adopted a different strategy, according to Cleartax.

Customers can visit the nearest branch of a bank and give their account details. As per RBI’s guidelines, even customers without bank accounts can exchange Rs 2,000 banknotes with other denominations. People can deposit Rs 2,000 banknotes at the bank where they have an account.

The public can exchange Rs 2,000 banknotes up to a limit of Rs 20,000 at a time. There is no deposit limit for Rs 2,000 notes. However, the general know-your-customer (KYC) and other cash deposit statutory norms will apply.

According to recent data from the RBI, as of August 31, 2023, approximately 93 percent of the Rs 2,000 currency notes that were in circulation on May 19 have been returned to banks, amounting to Rs 3.32 lakh crore. Consequently, as of August 31, 2023, the total value of Rs 2,000 banknotes in circulation stood at Rs 0.24 lakh crore, indicating that a significant share of these notes is already back into the system.

While there is a one-time limit of Rs 20,000 and no overall limit on cash deposits in bank accounts, tax experts say depositors should be aware of the Statement of Financial Transaction (SFT) rules. A deposit of more than Rs 10 lakh in the savings account can attract the attention of the Income Tax Department. Similarly, a deposit of more than Rs 50 lakh cash in the current bank account can also lead to reporting in SFT. That's because high-value cash deposits are reported by banks to the Income Tax Department as per the SFT rules. This is also reflected in the depositor’s 26AS and annual information statement.

In these cases, a tax notice can be received. On receiving any such notice, taxpayers need to explain the nature and source of that amount. If the explanation is unsatisfactory, the said amount may be treated as unexplained income for that previous year and strict action may be taken, said experts.

RBI earlier stated that although the notes would continue to be accepted as legal tender beyond, September 30, 2023, is the last day to exchange or deposit the withdrawn Rs 2,000 banknotes. When announcing the withdrawal, the RBI mentioned that it would determine the future status of the notes based on the quantity returned to/deposited in banks. The banking regulator is expected to provide an update on October 1.