New Delhi, Mar 15 (PTI) The government has achieved goals such as higher revenue collection, widening of tax net as well as curbing terror funding post the demonetisation of Rs 500 and Rs 1,000 bank notes in November 2016, Minister of State for Finance Pankaj Chaudhary said on Tuesday.
The government had cancelled the legal tender status of high value Rs 1,000 and Rs 500 denomination bank notes on November 8, 2016, aimed at flushing out black money, eliminating Fake Indian Currency Notes (FICN), and striking out the root of financing of terrorism and left-wing extremism, among others.
It also intended to formalise the non-formal economy, expand the tax base and employment, as well as give a big boost to digitalisation of payments to make India a less cash economy.
The purpose accomplished by demonetisation on revenue collection and widening of tax base and the gains accrued include robust growth of 18 per cent in 2017-18 in net direct tax collections over 2016-17, Chaudhary said in a written reply in the Rajya Sabha.
The minister said it was the highest in the preceding seven financial years, indicating the positive impact of demonetisation on the level of tax compliance in the country.
“In 2017-18, personal income tax (PIT) advance tax collections increased by 23.4 per cent and PIT self-assessment tax by 29.2 per cent over those for 2016-17, corroborating the premise that demonetisation and the subsequent use of bank deposit data by Income-Tax department had a major impact on voluntary tax payments by the non-corporate/individual taxpayers,” he said.
Besides, there was 25 per cent growth in the number of income tax returns (ITRs) filed in FY18. “It is the highest rate achieved in the preceding five years.” The minister said during 2017-18, the number of ITR filers was about 1.07 crore as compared to 85.51 lakh in 2016-17.
“In earlier years, the number of new filers was between 50 lakh and 66 lakh. There is, therefore, a clear upswing in the new tax filers during the period 2016-17 and 2017- 18, which can be attributed to higher level of compliance due to transfer of cash into the formal channels as a result of demonetisation,” he added.
Also, the number of ITRs by corporate taxpayer rose by 17.2 per cent in FY18, which was more than 5 times higher than the growth rate of 3 per cent in 2016-17 and 3.5 per cent in 2015-16.
“The demonetisation of bank notes of Rs 500 and Rs 1000 denomination resulted in significant positive impact on most theatres of violence in the country. Since illegally held cash forms the major chunk of terrorist funding, after the demonetisation, most of the cash held with the terrorists turned worthless,” Chaudhary said.
Post demonetisation, the flow of high-quality FICN reduced considerably, he added.
Providing data on FICN, he said the number of such pieces fell considerably during 2016-17 to 2020-21, from 7,62,072 to 2,08,625. PTI KPM KPM ABM ABM
