The larger purpose
of demonetisation was to move India from a tax non-compliant society to a
compliant one, and invalidation of non-deposited currency was not its only
objective, Finance Minister Arun Jaitley said on Thursday.
His comments come a
day after Reserve Bank of India said that almost all the Rs 500 and Rs 1,000
notes made illegal in November 2016 have returned to the banking system.
Reeling out data on
increase in taxpayer base to justify the unprecedented demonetisation which
overnight sucked out 86 per cent of the currency in circulation, Jaitley wrote
in a Facebook blog that “this necessarily involved the formalisation of the
economy and a blow to the black money”.
He further said:
“Was the invalidation of the Non-deposited currency the only object of
demonetisation? Certainly Not.”
Banks received Rs
15.31 lakh crore or 99.3 per cent of the Rs 15.41 lakh crore worth of Rs 500
and Rs 1,000 notes that were in circulation on November 8, 2016 – the day when
the note ban was announced, according to the RBI.
This means that
just Rs 10,720 crore of the junked currency notes did not return to the banking
system. Initial estimates had pegged that around Rs 3 lakh crore worth of
demonetised notes would not return to the system as they might have been
stashed away illegally to avoid taxes.
Jaitley said that
when cash is deposited in the banks, it loses anonymity and can be identified
with its owner.
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,” he
said, reports PTI.
He reeled out
numbers to support his claim – number of income tax returns filed growing from
3.8 crore in March 2014 to 6.86 crore in 2017-18; number of new returns filed
post demonetisation increased by 85.51 lakh and 1.07 crore in past two years;
advance tax in first quarter of 2018-19 witnessing a rise of 44.1 per cent in
personal income tax and 17.4 per cent in corporate tax category; and income tax
collection increasing from Rs 6.38 lakh crore in 2013-14 to Rs 10.02 lakh crore
“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,” he
said. “The growth of income tax collections in the pre-demonetisation two years
was 6.6 per cent and 9 per cent. Post-demonetisation, the collections increased
by 15 per cent and 18 per cent in the next two years. The same trend is visible
in the third year.”
This, he said, is
the positive impact of demonetisation.
of the economy, more money in the system, higher tax revenue, higher
expenditure, higher growth after first two quarters,” he added.