Please do remember that the 500 and 1000 rupee notes were promptly replaced with a new 500 and 2000 rupee note series.

Moreover, it was not made illegal, rather it was no longer considered legal tender. A far cry from making it illegal.

There are on the other hand limits on the size of cash only transactions without a PAN Card (tax documentation)

Recently, the reserve bank has announced that it is going to withdraw the 2000 rupee note. That means that it will no longer print or issue via banks 2000 rupee notes.

They will still remain legal tender.