Union Finance Minister of India Arun Jaitley Thursday said demonetisation has ushered in a better quality of life for Indian citizens, allowing for formalisation of the economy and more revenue, resources and infrastructure for the poor.
On November 8, 2016, Prime Minister of India Narendra Modi announced the biggest-ever demonetisation exercise India has ever seen by suddenly withdrawing Rs 500 and Rs 1,000 notes from public use in a bid to clamp down on black money and fake currency menace.
In a Facebook post on the second anniversary of demonetisation, Jaitley claimed that the system required to be shaken to help India move from to a digital economy.
Jaitley restated that demonetisation has helped achieve formalisation of the economy and ensured financial inclusion of the weaker sections. He added that it helped bring back black money stashed abroad, and saw technology facilitating the filing of returns and expanding the tax base.
“Confiscation of currency was not an objective of demonetisation. Getting it into the formal economy and making the holders pay tax was the broader objective,” Jaitley said, adding that it was “ill-informed criticism” that almost all the demonetised currency was returned.
Jaitley said India was a cash-dominated economy, but it is now becoming increasingly difficult to evade the tax system. “Demonetisation compelled holders of cash to deposit the same in the banks. The enormity of cash deposited and identified with the owner resulted in suspected 17.42 lakh account holders from whom the response has been received online through non-invasive method. The violators faced punitive actions,” he added.
In 2017-18, the tax returns filed increased by 25% from the previous year to 6.86 crore. Moreover, as of October 31, 2018, 5.99 crore returns have already been filed—an increase of 54.33% compared to the same date in 2017.
Jaitley added that the government has used the tax collections for better infrastructure creation, social sector and Rural India.