Demonetisation will widen tax base: Finance Ministry to Parliament panel

By: |
New Delhi | January 22, 2017 12:20 PM

Demonetisation will lead to a wider tax base and lower interest rates, thus paving the way for "sustainable faster economic growth", the Finance Ministry has said.

In a written response to the Parliament's Public Accounts Committee (PAC), the Revenue Department said that due to withdrawal of old high-value notes, the idle/hidden cash has come into the formal system which will be utilised for productive purposes. (PTI)In a written response to the Parliament’s Public Accounts Committee (PAC), the Revenue Department said that due to withdrawal of old high-value notes, the idle/hidden cash has come into the formal system which will be utilised for productive purposes. (PTI)

Demonetisation will lead to a wider tax base and lower interest rates, thus paving the way for “sustainable faster economic growth”, the Finance Ministry has said. In a written response to the Parliament’s Public Accounts Committee (PAC), the Revenue Department said that due to withdrawal of old high-value notes, the idle/hidden cash has come into the formal system which will be utilised for productive purposes.

“Targeted verification of suspect substantial deposits is likely to widen and deepen the tax base,” it said.

It is easier to track the cash which has returned to banking channels, thus making tax evasion “more difficult”, it added.

Further, increased availability of funds with banks and “lowering of interest rates” are expected to enhance credit disbursal, promoting investments in productive economic activities and giving boost to growth.The Revenue Department’s response was on the impact of demonetisation on economic growth, sources said.

You May Also Want To Watch:

Regarding other implications, it said that increasing use of non-cash modes of transactions will promote transparency and have a lasting positive impact on tax collections, both direct and indirect.

“Along with other measures for increasing transparency and strengthening enforcement, the demonetisation will pave the way for sustainable faster economic growth,” it said.

Do you know What is Cash Reserve Ratio (CRR), Finance Bill, Fiscal Policy in India, Expenditure Budget, Customs Duty? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Covid Blues: Second wave could give economy a jolt
2Discoms taking longer to clear their dues
3“We might see a further drop of 10 % in exports from the performance of FY21”