Union finance minister Arun Jaitley has said that the demonetisation of Rs 500 and Rs 1000 notes in November 2016, led to formalisation of economy, increased tax collection and higher growth. His statement comes a day after the Reserve Bank of India (RBI) data revealed that as much as 99.3 percent of the demonetised notes have returned to the banking system.
The minister has stated that the large purpose of note ban exercise was to move India from a tax non-compliant society to a tax-compliant society. He also said that this necessarily involved formalisation of the economy and a blow to the black money. He said ‘This is the positive impact of demonetisation. More formalisation of economy, more money in the system, higher tax revenue, higher expenditure, higher growth after the first two quarters.’
Jaitley further highlighted that the growth of income tax collections in the pre-demonetisation two years was 6.6% and 9%, while post-demonetisation, the collections rose 15% and 18% in the next two years. He noted that the same trend is visible in the third year. Adding further, he noted that in March 2014, the number of Income Tax (IT) returns filed was 3.8 crore, whereas in 2017-18, it has grown to 6.86 crore. He said in the last two years, when the impact of demonetisation and other steps are analysed, the IT returns have increased 19% and 25%.