The Larger Purpose of Demonetisation (#NoteBandi) was to move INDIA from a Tax Non-compliant society to a Compliant society – Finance Minister

 

Demonetisation (#NoteBandi) and its impact on Tax collection and Formalisation of the Economy – Sh. Arun Jaitley

The Reserve Bank has twice released its reports stating that the demonetised Notes of `500 and `1000 have been substantially deposited in the Banks.  A widely stated comment has been that just because most of the currency came back into the Banks, the object of Demonetisation has not succeeded.

Was the invalidation of the Non-deposited currency the only object of demonetisation?  Certainly Not.  The larger purpose of demonetisation was to move INDIA from a Tax Non-compliant society to a compliant society.  This necessarily involved the formalisation of the Economy and a blow to the black money.

 

How has this been achieved?

 

  • Increase in ITR Filing In March 2014, the number of Income Tax returns filed was 3.8 crores.  In 2017-18, this figure has grown to 6.86 crores.  In the last two years, when the impact of demonetisation and other steps is analysed, the Income Tax returns have increased by 19% and 25%.  This is a phenomenal increase.

 

 

 

  • Increase in Income Tax Collection – The Income Tax collections have increased from the 2013-14 figure of `6.38 Lakh crores to the 2017-18 figure of `10.02 Lakh crores.
  • The growth of Income Tax collections in the Pre-demonetisation two years was 6.6% and 9%.  Post-demonetisation, the collections increased by 15% and 18% in the next two years.  The same trend is visible in the third year.

 

  • Increase in Registered Assessee under GST – The GST was implemented from 1st July, 2017 i.e. Post demonetisation.  In the very first year, the number of registered assesses has increased by 72.5%.  The original 66.17 Lakh assesses has increased to 114.17 Lakhs.

Positive Impact of Demonetisation – Following are the positive impact of the Demonetisation. 

  • More formalisation  of the Economy,
  • More Money in the System,
  • Higher Tax Revenue,
  • Higher Expenditure,
  • Higher Growth after the first two quarters.

(Article Compiled from the Information and Data available on PIB Source )

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