Income tax expense (IT) grew by 20.2 percent and profit tax was 19.5 percent in the first seven months of the current financial year (2018-19 or FY19) compared to the same period last year (2017-18) 18th anniversary), Finance Minister Arun Jaitley said on Thursday. That is why he deserved the government's decision to launch high-value banknotes on November 8, 2016.
In the FY19 budget, the government has targeted growth of 19.88 percent for personal I-T and 10.15 percent growth in profit tax.
Referring to a multitude of statistics, Jaitley published on Facebook on the site two years before demonization – 2014 – (FY15) and 2015 – 16. (FY16) – direct tax collection increased by 6.6%, or by 9%. From demonization, the increase was 14.6 percent in 2016-17 and 18 percent in 2017-18.
He also stated that formalization of the economy due to demonization and goods and services tax (GST), which was expelled in July 2017, also led to an increase in indirect tax collection.
"In the first eight years, the ratio of indirect taxation to gross domestic product (GDP) was 4.4 percent. Post-GST (sic) is at least 1 percentage point to 5.4 percent," he said in his post, "Influence of Demonization".
He said, despite the annual relief of 970 billion RHS-I-T taxpayers and 800 billion Rs to GST estimators, tax collections have risen.
The finance minister also said that the GST was increasingly relieved of taxes. The index of indirect taxes in GDP grew to 5.4 percent of GST, from 4.4 percent in the first half of the 15th.
Tax rates – directly and indirectly – were reduced, he said, citing, for example, 334 commodities on which the effective tax before the GST was 31 percent.
Jaitley said formalization of the economy prompted the government to allocate more resources for the welfare and development of infrastructure.
In the first eight months, 68.6 million tax applications were filed – an increase of 25 percent over the previous year. As of October 31, this year, 59.9 million tax applications were filed – an increase of 54.33 percent over the previous year. This year around 8.6 million new taxpayers were added.
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When Prime Minister Narendre Modi's government came to power in May 2014, the number of I-T filers was 38 million. Now the number reached 68.6 million.
"Until the first five years of this government have been completed, we will be near the doubling of the base of the estimator," he said.
FM said another success of demonization was a stimulus for digitization. With little cash in the economy right after the RS 500 and Rs 1,000 notebook demonetized, indigenous cards and payment systems like RuPay and Unified Payments Interface (UPI) were overtaken by Mastercard and Visa.
"Today, Visa and MasterCard lose their share of the indigenous payment system. UPI and RuPay share reached 65 percent of debit and credit card payments," Jaitley said.
He also rejected those who criticized demonization as "badly informed" because he said the entire demonized money was deposited in banks. The seizure of the currency was not the target of the ban on recording, he said.
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"The introduction of the formal economy and the creation of a taxpayer was a wider goal, and the system must be shaken to move India from cash to digital transactions, which would have obviously impacted on higher tax revenues and a higher tax base," Jaitley said.
Economic Affairs Secretary Subhash Chandra Garg said the demonization and GST reflect the long-term vision of the government and its ability to undertake massive structural reforms.
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"Tax submarines under direct and indirect taxes are close to doubling. Digital payments have grown sharply and become commonplace. False notes are out," Garg has been tweeted.