To discourage cash transactions, the government should eliminate the Rs 5,000 currency note, according to advice from the Overseas Investors Chamber of Commerce and Industry (OICCI). Their recommendations for the fiscal year 2024–2025 budget include this one.
In addition, the National Tax Number (NTN) should be needed in order to open a bank account and to buy or sell a car or other property, according to the OICCI’s proposal.
They also suggest requiring NTN for club memberships and trips abroad.
The chamber also recommends enacting an income tax on plane tickets and a withholding tax on travel expenses. Prior to making a decision regarding the Rs5,000 notes, the government would take these suggestions into account.
Estimated to be more than Rs. 17 trillion, the federal budget will probably be presented to Parliament on June 7 after being approved by the federal cabinet in a special meeting.
Pakistan is advised to stop issuing the Rs. 5,000 currency note due to a number of reasons. The following are some of the motivations for this suggestion:
- Evasion of taxes and Black Money:
High-denomination banknotes, such as the Rs 5,000 note, are frequently connected to illegal acts, such as the transfer of unreported wealth and tax avoidance. The authorities hope to stop these behaviours by stopping these notes.
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- Promoting Electronic Transactions:
Removing big denominations may encourage more individuals to use digital payment options. People are more likely to use electronic payment methods, which can be traced and contribute to formal economic activity, when cash transactions are restricted.
- Cutting Down on Counterfeit Currency:
Because high-value banknotes can be quite valuable, counterfeiters frequently target them. The purpose of the Rs5,000 note’s phase-out is to lessen the amount of counterfeit money in circulation.
- Making Cash Management Simpler:
For banks and businesses, managing big denominations can be difficult. Smaller denominations are simpler to work with, move, and store. The Rs 5,000 note could be discontinued to simplify cash management procedures.
- Encouraging Inclusive Finances:
Promoting the use of lower denominations could aid in increasing the number of individuals enrolled in the official financial system. A larger populace can now participate in transactions, particularly those who depend on lower-value currencies.
- Observing International Standards:
To address such issues, a number of nations have already phased out high-denomination notes. Pakistan would be in line with international trends if it implemented this.
Recall that these are but a few of the factors, and the choice will finally be made after a careful analysis of the practical, social, and economic ramifications. The administration will carefully weigh all the information before making a decision.