Actually Indian government is not banning the highest denomination (₹500 and ₹1,000) paper notes. They are simply replacing the old notes with the new notes. And they have introduced the ₹2,000 banknote, which didn't existed earlier and news rumoured that there will be Nano GPS Chip in the note which will help tax department to track money through satellite.
Now it sounds confusing and seems misleading for a government to ban a high denomination only to replace it and introduce yet another with a higher value. Not a very good decision from economic point of view and if indeed, they were pursuing a cashless society agenda. Even the rumour about planting Nano GPS chip on the 2000 banknotes turns out to be true, it won't accomplish much, because those who have something to hide would definitely avoid it, knowing those notes are tracked.