Economic Survey 2018: Taxpayers increased post demonetisation
The Economic Survey has pointed out the huge increase in tax base post demonetisation. The total number of new taxpayers in the 13 months since demonetisation (November 2016 – November 2017) compared with previous 13-month time windows increased by 10.1 million filers compared with an average of 6.2 million in the preceding six years.
During demonetisation in November 2016, the Government decided to phase out the earlier Rs 500 and Rs 1000 denomination notes. One of the aims of demonetisation was to increase the formalisation of the economy and bring more Indians into the income tax net, which includes only about 59.3 million individual taxpayers (filers and those whose tax is deducted at source in 2015-16), equivalent to 24.7 percent of the estimated non-agricultural workforce.
Has this happened and to what extent? Here’s a look at the graphical representation
This translates roughly into about 1.8 million additional taxpayers due to demonetisation-cum-GST, representing 3 percent of existing taxpayers.
Further analysis suggests that new filers reported an average income, in many cases, close to the income tax threshold of Rs. 2.5 lakh, limiting the early revenue impact. As income growth over time pushes many of the new tax filers over the threshold, the revenue dividends should increase robustly.moneycontrol