Finance Minister Arun Jaitley said on Wednesday that the recent demonetisation move will help the government keep more transactions in check, increasing the government’s tax collection and contributing to the next year’s total tax collections.
“People have been compelled to put money into banks,” Jaitley said in a chat with senior editors after presenting his Budget proposals for the next financial year 2017-18. As a result of demonetisation, transactions done through banks or digital platforms have risen and use of cash has declined. The government will now be able to better monitor those transactions which would have earlier escaped monitoring altogether, and a lot of it will come to the government as income taxes, Jaitley said.
The government has set an ambitious target of raising its personal income tax collections in the next fiscal by 25%, which is on top of the 23% growth being eyed this fiscal. Jaitley has set a total tax revenue target for the fiscal 2017-18 at Rs 12.27 lakh crore.
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Prime Minister Narendra Modi and the government has been pushing for an increasingly cashless economy, ostensibly to stem the use of unaccounted wealth and keep a better record so as to eventually increase the tax base. It has been promoting more and more digital transactions, following the surprise demonetisation of high-value currency notes on November 8.
The government has ever since announced incentives on using digital wallets in forms of cash-back on making payments for various utilities such as petrol and daily dairy supplies.
Arun Jaitley further said that the government needed to spend more, in order to spur the economy feeling the pressure of slowdown in private investments.
“Our strengths are public investment, lots of FDI (foreign direct investment) and increased consumer spending… and our weakness is the private sector which is still struggling,” Jaitley said. Considering this, the government chose to concentrate on augmenting expenditures on the sectors that have been most successful and yielded results over the past few years, he added.
Thus, the Budget 2017-18 has allocated to invest Rs 3.96 lakh crore in infrastructure sector, and has boosted spending in rural areas, including housing, roads, irrigation, farm sector, etc, Jaitley said.
The budget has given significant impetus to low-cost housing and housing with measures such as its classification under ‘infrastructure’ sector and reduction in holding period for long term capital gains tax waiver to two years.