Demonetization was the reason that led to a substantial flow of tax base India ever saw in past years, if we see the government’s past records. The government has disclosed its past data to prove their statement. In April to August 2017 period, there was a surge in tax returns by 25% as compared to last year.
Considering what was demonetization’s aim and why was it implemented, the flow is not usual. For previous years, seeing the entire financial year, returns of tax have grown at a higher or equal pace. In 2012 to 2013, the rise was of 31%, where as in 2013–2014, 38% rise was seen. In year 2014 to 2015, the growth fell to 15%, and settled to 22% in 2016 to 2017 before it could reach to 27% in 2015 to 2016.
Comparing with last year’s April to August period with this year’s April to August period, an increase in tax payers by 60 Lakh was noticed.
If you analyze the date of previous years in total and see the growth in total number of tax payers, demonetization will not be any different as it was considered to be.
As per the Income Tax Department’s data, in April to August 2016, the rise in tax payers was by 40% and the rise was by 16% in April to August 2015. Number of tax payers rose to 91 Lakh because of demonetization in the financial year 2016 to 2017, stated the government. But, this figure was restated to being at 80.7 Lakh according to Economic Survey.
In response to the different findings, Finance Minister said the two figures are for different period of time without giving any further clarifications.
Demonetization did not help in noteworthy pushing the tax base, if we compare either 91 Lakh or 80.7 Lakh with previous year’s.
76.04 Lakh individuals who were first-time tax payers were added to the income tax filing list in 2014–2015, according to Finance Minister. But, in 2015–2016, this number came down to 63.5 Lakh before even reaching to 80.7 Lakh in 2016–2017.