During 2015-16, there were only 55.9 million or 3.7 crore Indians who paid income tax in India. But during 2016-17 fiscal year, total tax payers have increased to 65 million or 6.5 crore.
This means 9.1 million or 91 lakh new tax payers were created in a year, which is phenomenal to say the least.
And demonetization is the reason behind this massive surge in the number of tax payers.
Demonetization Increases Tax Payers in India
As per Govt. officials, demonetization had a direct effect in inspiring more Indians to pay taxes, and this is a huge achievement. As per their statement which was given on May 3rd, two Govt. officials said, “About 9.1 million new taxpayers have been found, significantly expanding the taxpayer base,”.
This is one crucial, tactical data which proves that demonetization has indeed helped Govt. to rope in more tax-payers, and increase tax collections.
Last month, it was reported that tax revenue to Central Govt. has increased by 18% to reach Rs 17.1 trillion, as on fiscal year ending March 31, 2017. While Central excise duty increased by 33.9%, service tax collection increased by 20.2%, compared to last year.
And if we connect these two stats, then it is clear that demonetization drive had a positive effect on the Indian economy.
But.. Has Demonetization Revealed More Black Money?
Now, this is a question which is open for debate.
For instance, not everyone who is a tax-payer, also files returns. Out of 55.9 million tax payers in 2015-16, only 37 million Indians filed returns. Out of this number, 9.9 million or 99 lakh showed income below Rs 2.5 lakh, which is the threshold amount for paying tax.
While 19.5 million showed income between Rs 2.5 to Rs 5 lakh.
If these numbers are increased for 2016-17, then it will prove that black money has indeed been deposited and revealed, which will be the real victory of demonetization.
Govt. officials have informed that the mere act of depositing money into bank account doesn’t convert black into white – proper tax returns need to be made in order to make it accountable.
Overall, around 6 million new tax payers are added into the tax net every year, and 1 million stops paying tax. This means, even if demonetization hasn’t had happened, 5 million new tax payers would have been into the tax structure.
Even then, 4.1 million or 41 lakh new tax-payers have been ‘discovered’, which is a great news for the tax department.
Do you think demonetization had any positive effect on the Indian economy? Do let us know your views, by commenting right here!