On November 10, a real estate broker walked into a popular accounting firm in Mylapore in Chennai with two of his aides. The chartered accountant at the firm had been managing his wealth for more than 15 years and had always been surprised about the man’s “clear record” in his income papers filed over the years. But this time, things were different.

“The man came and said he had about Rs 2 crore in cash,” said the accountant, who did not wish to be identified. The realtor was in panic, he said, and the previous day, he had tried to give away the money as part of a land deal. But since Rs 500 and Rs 1,000 denominations were rendered illegal by the Narendra Modi government starting November 9, he was not able to strike a deal.

Over in New Delhi, interns in an accounting firm in the Greater Kailash area have been busy collecting and filing papers from clients who have thronged their offices since November 9, looking for ways to ensure that their stocks of cash do not become worthless pieces of paper. According to a circular issued on Wednesday, people can cumulatively deposit a maximum of Rs 2.5 lakh in cash in their bank accounts till December 30 without showing their Permanent Account Number cards. For any deposit exceeding that amount, the person will have to show their PAN details, meaning that they come under the income-tax net.

“It was unbelievable,” said an intern. “We could not find chairs for them. The office was packed.”

From helping them find gold traders to manipulating the banking system, accountants are burning the midnight oil to come up with ingenious ways to rescue their clients. Across cities in India, it is a very busy time for chartered accountants. Some said they were getting more clients than they do in March, when the financial year is about to end and accounts have to be audited.

Chartered accountants also broadly agreed that while the demonetisation move had hurt the common public and made them queue up outside banks for hours to access small amounts of money for day-to-day transactions, it had also turned the heat on big sharks hiding a large stash of black money.

Finding a way

Some of them, however, have managed to find a work-around. For instance, large businessmen are being asked to convert unaccounted-for cash by using the bank overdraft or credit system, said a chartered accountant from Madurai.

Explaining the modus operandi, he said that if a person has Rs 10 crore unaccounted-for wealth in cash, he has has to find someone who has already accessed the bank overdraft facility for the same or larger amount and offer to repay it with the black money. The receiver will charge an interest for helping convert the black money to white. So, when he withdraws the money again in the next cycle using the overdraft facility, he will repay the other person after deducting the interest.

“All that one needs to do is adjust the accounting books of the person with the overdraft facility and show cash inflows of Rs 10 crore into the business,” the accountant said. For someone who runs a large business, doing this would be easy. He said a number of such transactions have already taken place. “The trick here is to find two persons whose needs match,” he said. “In a metropolitan city, this is a cakewalk.”

To those running businesses that involved large cash transactions everyday, accountants are suggesting they adjust their books by creating pre-dated high-value bills and invoices. “If you could show more sales, then the cash in possession could be adjusted,” a chartered accountant from Bengaluru said. This has to be done carefully, as a sudden spike in sales could attract investigations. “You have to adjust purchases and the resulting cash outflow proportionally,” he said.

Though traders who take this option will have to pay Value Added Tax on these pre-dated bills, the amount is negligible compared to the 200% penalty the Centre had threatened to levy on unaccounted cash. The VAT rates vary between 1% to 14.5%, depending on the goods.

Land and gold

A chartered accountant in Chennai said a large number of those who came to him for inquiries wanted to know what to do with cash from sale of property. While the sale papers were made for the market value of the land, the property was, “in nine out of 10 cases”, sold for a big premium, which was unaccounted for.

“If the area the land is located in is upmarket, you can be very sure that the sale papers would have a far lower figure than the actual sale consideration,” the accountant said.

This was done to avoid paying capital gains tax on the premium. As per existing laws, if the land had been in possession for more than 36 months, it is considered a long-term capital and the sale amount is taxed at 20%.

Many people have now expressed willingness to buy land, even if it means paying more for a property of low value, to ensure their cash does not go to waste.

Others are trying to find out how to change their money to gold. While jewellers are now reluctant to take the demonetised notes, it was still easy to get gold in the black market. “In some areas, gold is being sold at 50% premium,” an accountant said. “Since gold is an appreciating asset, the buyers don’t mind.”

Family to the rescue

Several chartered accountants that Scroll.in spoke to said that while a large stash was nearly impossible to exchange, loopholes were being explored for clients with smaller amounts of cash.

Family and friends have come in handy for those who are not businessmen and cannot ante-date their invoices. Chartered accountants are advising such clients to find as many trusted people as possible to deposit money into their accounts in instalments, with the total amount not exceeding Rs 2.5 lakh. “This option won’t work if you have too much unaccounted cash,” an accountant said.

Another option that accountants have given their clients is to claim their cash was money they had set aside as liquid savings over the years, from their legal income that had already been taxed. This too would work only if the amount of unaccounted-for cash was small. “In fact, we’ve seen some genuine cases like these where wives and mothers have saved substantial amounts [in cash],” the accountant said.

Many lawyers and doctors are among those who have turned up at accounting firms looking for ways to convert their money. A lawyer in Delhi was advised by his accountant to pay all his juniors a year’s salary as advance in cash. “But my juniors were not willing to take it and I also felt any scrutiny of their accounts will finally end on my doorstep,” the lawyer said, requesting anonymity.

Divine route

Chartered accountants said that some of those who were unable to find ways to turn their black money white were planning to donate the cash to religious bodies and temples, so that they could at least get some blessings if not their money back.

A trader even asked one firm if he could form a religious trust quickly, where he could route black money and pass it off as donations.

Accountants, however, have urged their clients not to panic. “Even if a large amount was deposited into an account, the person had time till July next year to show the source of income,” said an accountant. “There is also hope that the government will not enforce its threat of 200% penalty on unaccounted money.”

However, some of them are fast running out of solutions. “We do not have a magic wand to turn black money into white,” an accountant in Bengaluru said.