It’s been since Prime Minister Narendra Modi introduced the demonetisation of Rs 500 and 1000 currency notes in the move to curb black money from the economy. And the step by the Centre has had its own positive outcomes. The most inportant being the improvement in the level of tax compliance, says The Indian Express.
This is clearly shown by the tax department’s date until June 30, 2017 that for financial year 2016-17, 1.26 crore new taxpayers, including return filers and non-filers making tax payments, were added to the tax base of the country. As per IE report, the total number of returns, electronic as wells as paper, filed during the entire financial year 2016-2017 was 5.43 crore, 17.3 per cent more than the returns filed during 2015-16. The tax department cliams that the levels in tax compliance has improved after cash deposits following demonetisation.
“The addition amounted to about 5.4 lakh taxpayers or 1 per cent of all individual taxpayers in just a few months. The addition to the reported taxable income of these new taxpayers, however, was about Rs 10,600 crore. The tax base did expand after demonetisation. It is, however, interesting that the average income reported of the new taxpayers — Rs 2.7 lakh — was not far above the tax threshold of Rs. 2.5 lakh, so the immediate impact on tax collections was muted”, said the survey by Chief Economic Adviser Arvind Subramanian.
The searches by the tax department has also recorded a steady increase. The number of surveys by the tax department recorded an increase of 183 per cent from 4,422 to 12,520, while detection of undisclosed income saw an increase of 44 per cent from Rs 9,654 crore to Rs 13,920 crore. The crackdown on shell companies has also striked off 2.24 lakh companies that had been inactive.
As per IE, the time after the demonetisation has come at a proper time for banks as the large amount of cash deposits after demonetisation set the stage for banks to subscribe to the Rs 1.35-lakh crore worth recapitalisation bonds, which are proposed to be frontloaded over the next four quarters.