Two years of Demonetisation: Jaitley’s view

Today we complete two years after demonetisation.

Demonetisation is a key step in a chain of important decisions taken by the Government to formalise the economy.

The Government first targeted the black money outside India. Asset holders were asked to bring this money back on payment of penal tax. Those who failed to do so are being prosecuted under the Black Money Act. Details of all accounts and assets abroad which have reached the Government, resulted in action against the violators.

Technology has been used for both Direct and indirect taxes to facilitate filing of returns and expanding the tax base.

Financial inclusion was another important step to ensure that even weaker sections became part of the formal economy. Jan Dhan Accounts have resulted in most people being connected to the banking system. The Aadhaar Law has ensured that Direct Benefit Transfer of Government support system reached directly into the bank accounts. The GST has further ensured that in the matter of Indirect taxes, the tax procedures become simple. It is now becoming increasingly difficult to evade the tax system.

India was a cash dominated economy. Cash involves anonymity in transactions. It bypasses the banking system and enables its possessors to evade tax. Demonetisation compelled holders of cash to deposit the same in the banks. The violators faced punitive actions. Larger deposits in banks improved lending capacity for the banks. A lot of this money was diverted to the Mutual Funds for further investments. It became a part of the formal system.

Today we complete two years after demonetisation.

Demonetisation is a key step in a chain of important decisions taken by the Government to formalise the economy.

The Government first targeted the black money outside India. Asset holders were asked to bring this money back on payment of penal tax. Those who failed to do so are being prosecuted under the Black Money Act. Details of all accounts and assets abroad which have reached the Government, resulted in action against the violators.

Technology has been used for both Direct and indirect taxes to facilitate filing of returns and expanding the tax base.

Financial inclusion was another important step to ensure that even weaker sections became part of the formal economy. Jan Dhan Accounts have resulted in most people being connected to the banking system. The Aadhaar Law has ensured that Direct Benefit Transfer of Government support system reached directly into the bank accounts. The GST has further ensured that in the matter of Indirect taxes, the tax procedures become simple. It is now becoming increasingly difficult to evade  taxes.