New Delhi: Union finance minister Arun Jaitley on Thursday said that demonetisation of Rs 500 and Rs 1,000 notes led to formalisation of economy, more tax collection and higher growth.
The Reserve Bank on Wednesday had come out with a report saying that 99.4 per cent of the banned currency has come back. This has led to a political debate in the country where opposition is alleging that demonetisation hurt the economy by decreasing GDP by 2 per cent.
“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,” Mr Jaitley said.
He said that 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,” said Mr Jaitley.
He said that when cash is deposited in the banks, the anonymity about the owner of the cash disappears. “The deposited cash is now identified with its owner giving rise to an inquiry, whether the amount deposited is in consonance with the depositor’s income. Accordingly, post demonetisation about 1.8 million depositors have been identified for this enquiry. Many of them are being fastened with tax and penalties. Mere deposit of cash in a bank does not lead to a presumption that it is tax paid money,” said Mr Jaitley.
He pointed out that in March 2014, the number of income-tax returns filed was 3.8 crores and 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 per cent and 25 per cent. This is a phenomenal increase,” said Mr Jaitley.
He said that the number of new returns filed post demonetisation increased in the past two years by 85.51 lakhs and 1.07 crores.
Mr Jaitley said that for 2018-19, advance tax in the first quarter has increased for personal income tax assesses by 44.1 per cent and in the corporate tax category by 17.4 per cent.
The I-T collections have increased from the 2013-14 figure of '6.38 lakh crores to the 2017-18 figure of '10.02 lakh crores, he said.
Finance minister noted that growth of income tax collections in the pre-demonetisation two years was 6.6 per cent and 9 per cent.
