New Delhi: Blunting the opposition claims that demonetization has destroyed the economy, new data are suggesting that the financial surgical strike has actually helped the government garner more tax revenues. This increased revenues can now be used for developmental purposes.
Four years after demonetization, there is marked increase in direct net tax revenues, increased revenue from advance and self-assessment tax under personal income tax and rise in new tax filers.
This points clearly to the fact that despite a short period glitch in the financial system, demonetization is actually a blessing for the nation by bringing in more revenues which can be used to finance more infrastructural and social developments.
The corporate income tax grew at 14% and personal income tax rose by 13% in the fiscal 2018-19.
Also, the voluntary tax payments under advance tax grew by 14%.
Direct tax collection in 2017-18 grew by 18% to touch Rs. 10 lakh crore compared to the previous year.
Another positive outcome of demonetization was that more common people began to use the service of formal banking system. Their money became more safe and secure when they exchanged their old currencies and deposited their money in newly opened accounts.
Demonetization was also an incentive to file tax revenues. Many of those who had not thought of filing tax began to have a rethink. This has increased the number of tax filers more than before demonetization.
Besides, government sources say that 18 lakh cases were identified where cash deposits after demonetization did not match their tax returns. Government relentlessly followed it up with sms and emails forcing them to pay the tax that are due.
In contrast to opposition claims, demonetization has actually helped to increase government revenue by rising tax inflow, widening the tax rate and also formalizing the economy.