The Tax Base will be Widened by Demonetisation: Finance Ministry Tells Parliamentary Panel
The Finance Ministry has told in a statement that demonetisation will lead to lower interest rates as well as create a wider tax base which will lead to “sustainable faster economic growth”.
The written response by the Revenue Department to the Parliament’s PAC (Public Accounts Committee) stated that because of withdrawal of high value old notes, the hidden/idle cash has come into the system which can further be used for productive purposes.
Also it stated that, suspect substantial deposits can be targeted more easily and the tax base will deepen with it. Cash that has returned to the bank can be tracked easily which will lessen chances of tax evasion.
It is also being expected that low interest rates along with increased funds availability would increase credit disbursal which in turn will give boost to growth as well as encourage investments in economic activities. The Revenue Department further stated that using non-cash modes for transactions will increase transparency and create an impact on tax collection, indirect as well as direct.
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