The trivialization of demonetization leads to the formalization of the economy and to the broader tax base: Arun Jaitley

Finance Minister Arun Jaitley said Thursday that the demonetization has resulted in a formalization of the economy and an increase in the tax base, prompting the government to allocate more resources to the poor infrastructure development. In an article posted on Facebook on the occasion of the second anniversary of the demonetization, Jaitley said that during the first four years of the government of the National Democratic Alliance (NDA), the number of taxfilers who submitted a tax return increased from 3.8 to 3.86 crore in May 2014. "When the first five years of this government are over, we will be on the verge of doubling the number of people badessed," he said. he said in an article entitled "Impact of Demonetization".

According to the minister, the demonetization of the 500 and 1,000 rupee bills in November 2016 had resulted in "more formalization (of the economy), more revenue, more resources for the poor, better infrastructure and a better quality of life for our citizens. "

In addition, with the introduction of the goods and services tax (GST), it is becoming increasingly difficult to evade the tax and tax system. the ratio of indirect taxes to gross domestic product (GDP) increased to 5.4% after GST, from 4.4% in 2014-2015.

By calling "ill-informed" almost all the money deposited in banks after the demonetization of banks, Mr. Jaitley said that the confiscation of the currency was not a goal of demonetization.

"The broadest goal was to get into the formal economy and make taxpayers pay. The system had to be shaken for India to move transactions in. This would obviously have an impact on higher tax revenues and on a higher tax base, "said Jaitley.

On November 8, 2016, the government announced the ban of old 500 and 1,000 rupee bills to limit the black currency in the system.

From November 8, 2016, on the crore of 15.41 rupees worth Rs 500 and Rs 1,000 in circulation, 99.3 percent or tickets worth 15.31 rupees went back into the banking system .

This means that only 10,720 Rupees of mishandled money did not return to the banking system. After the ban of the Notes, old old banknotes, known as Bank Notes (SBNs), were permitted to be deposited in banks with unusual deposits subject to income tax control.

Jaitley stated that demonetization compelled cash holders to file the same with banks.

"The enormity of the species deposited and identified with the owner led to the suspicion of 17.42 lakh account holders whose response was received online by a non-invasive method," he said. . The violators faced punitive actions. Larger deposits in banks have improved the lending capacity of banks. Much of this money has been diverted to mutual funds for other investments. It's become a part of the formal system, added Jaitley.

He stated that the share of the locally developed payment system, namely the unified payment interface (UPI) and the RuPay card, had reached 65% of payments made by debit and credit card.

Jaitley said that in 2017-2018, the tax returns filed reached 6.86 crores, an increase of 25% over the previous year.

This year, as at October 31, 2018, 599 crores have already been submitted – representing an increase of 54.33% over the previous year until that date. Not less than 86.35 lakh new depositors were added this year.

Economic Affairs Secretary Subhash Chandra Garg said the demonetization and the GST reflected the government's long-term vision and ability to undertake mbadive structural reforms. "Taxpayers subject to both direct and indirect taxes are about to double, digital payments have risen sharply and have become commonplace, counterfeit notes are out," Garg said.