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Demonetization behind tax collection drive, says RBI MPC member – Mintpaisa

Demonetization has improved the digitalization and formalization of the economy and reduced tax evasion, says Ashima Goyal

Demonetization has improved the digitalization and formalization of the economy and reduced tax evasion, says Ashima Goyal

Ashima Goyal, a member of the RBI’s Monetary Policy Committee (MPC), attributed the increase in tax revenue to demonetization and said it would help the country move towards the ideal situation where low taxes are levied on a wide base.

On November 8, 2016, Prime Minister Narendra Modi announced the demonetization of old ₹1,000 and 500 banknotes and one of the main aims of this unprecedented move was to curb the flow of black money and promote digital payments .

Noting that demonetization has short-term costs but long-term benefits, Ms. Goyal said it improves the digitalization and formalization of the economy and reduces tax evasion, although this all needs to go further.

“It contributed to the tax momentum the country enjoys today. It helps move us towards the ideal of low tax rates on a broad base,” she said. PTI.

On Oct. 9, the tax department said gross corporate and personal income tax collections jumped nearly 24% so far in the current fiscal year to 8.98. ₹ lakh crore.

GST collections remained above ₹1.40 lakh crore for the seventh consecutive month at ₹1.47 lakh crore in September, a 26% increase over last year, reflecting the buoyancy of TPS collection taxes.

However, earlier this month, former Congress President Rahul Gandhi said that the BJP’s demonetization policies, GST and farm laws are weapons aimed at India’s poor and small entrepreneurs.

Responding to a question about central bank digital currency (CBDC), Ms. Goyal said that the objectives of the CBDC are to reduce the use of cash and provide additional functions to the existing payment system rather than replace it. .

“The CBDC can certainly meet new needs in the digital age, reach remote areas and improve financial inclusion, and reduce costs because money is expensive and cumbersome,” she noted.

Recently, the Reserve Bank said it will soon start piloting electronic rupiah for specific use cases to boost India’s digital economy, make payment systems more efficient and control money laundering.

In a concept note on digital currency from the central bank, the RBI said the CBDC aims to complement, rather than replace, current forms of money and envisions providing an additional payment channel for users, not replace existing payment systems.

The CBDC is a digital form of banknotes issued by a central bank. While most central banks around the world are considering issuing CBDCs, the primary motivations for issuing them are specific to each country’s unique requirements.

Asked about India’s growing trade deficit, Ms. Goyal said multiple policy levers are available to reduce the deficit, among short-term measures are exchange rate depreciation and reduction in aggregate demand.

According to her, more emphasis should be placed on measures to help longer-term sustainability, such as reducing oil intensity as well as dependence on energy imports and encouraging exports.

Ms. Goyal suggested that better export incentives increase the competitiveness of Indian industry by reducing the costs and difficulties of doing business here.

India’s trade deficit widened to $26.72 billion in September, while exports contracted 3.52% to $32.62 billion.

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