The Union Cabinet approved promulgation of an ordinance to impose a penalty, including a jail term, for possession of the scrapped 500 and 1,000 rupee notes+ beyond a cut-off on 28 December.

The Union Cabinet approved ordinance on demonetisation bringing much needed clarity over note ban on 28 December. The ordinance is to extinguish liability of government and RBI on the demonetised high-denomination notes.
Under the ordinance, hoarding, receiving or transferring banned Rs 500, 1000 notes after March 31, 2017 will invite punishment. One can only have a maximum of 10 old notes.

Important Points
The Specified Bank Notes Cessation of Liabilities Ordinance approved by Modi Cabinet.
After December 30, banned Rs 500, 1000 notes will only be submitted through select branches of RBI.
In case an individual deposits old currency in RBI after December 30 then a declaration has to be submitted on why he/she couldn't submit in the given timeframe.
Till March 31, 2017, in case you are not able to go physically to an RBI branch then you can send it through an insured post along with a declaration why you couldn't come, why you have not been able to deposit the money till now.
The penalty rules will kick in if old notes are not declared after March 31, 2017. Punishment for possession of more than 10 old notes.
4-year jail term if you keep old notes post March31, 2017. Rs 5,000 fine on transaction in old notes.

In 1978, a similar ordinance was issued to end the governments liability after Rs 1,000, Rs 5,000 and Rs 10,000 notes were demonetised by the Janata Party government under Morarji Desai.