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Demonetisation – A Golden Opportunity for Widening the Taxpayer Base

dc.contributor.authorRajiva Ranjan Singh
dc.contributor.authorAnandita Bagchi
dc.description.abstractThe demonetisation exercise announced by the PM on November 8, 2016, aimed to tackle the problems of black money, fake currency, corruption, and terror funding. With time, more targets were added such as the creation of a cashless economy, curbing real estate prices, and broadening the taxpayer base. Although black money cannot be wiped out in a single stroke the shock effect of demonetisation clearly conveyed the Government’s determination to tackle the problem upfront. In the past, too, Governments have provided opportunities to citizens to disclose unaccounted incomes in return for pardons. Indeed, similar efforts to demonetise high value currency, aimed at the black economy were made in 1946 and 1978 but met with little success. The demonetisation of 2016 is expected to yield better results since there is almost 100% banking coverage; the introduction of a taxpayer identification number (PAN) and a citizen identification number (Aadhaar); more digital transactions, extensive computerisation in the banking sector and in government departments, especially the Income Tax department. The latter is equipped with the latest hardware and software and supported by competent officers. The authors acknowledge the stress that this sudden move put on the common man. The RBI’s Annual Report 2017, showed that 99 percent of the demonetised currency had found its way back to the banks suggesting first, that most black money in the Indian economy is not held as cash, and secondly, that the Income Tax department now has a large amount of financial database. The authors feel that the Department should use technology to compile 360-degree profiles of all citizens based on: (i) all transactional data received since November 2016, and (ii) the large amount of historical data and third-party information available. Action by the Government/Department should be based on proper data analysis since tax proceedings can be initiated till six years after March 2017. The paper also recommends that the Department act with a focus on the 'customer' and in a non-intrusive and taxpayer-friendly manner.
dc.publisherIndian Council for Research on International Economic Relations
dc.titleDemonetisation – A Golden Opportunity for Widening the Taxpayer Base
dc.typeWorking Papers
dc.subject.expertPublic Accounting
dc.subject.expertNational Budget
dc.subject.expertMunicipal Bonds
dc.subject.expertLocal Government
dc.subject.expertLocal Taxes
dc.subject.expertInternational Monetary Relations
dc.subject.expertInternational Financial Market
dc.subject.expertInternational Banking
dc.subject.expertCentral Banks
dc.subject.expertBusiness Financing
dc.subject.expertCapital Resources
dc.subject.expertBudgetary Policy
dc.subject.expertCapital Needs
dc.subject.expertCorporate Divestiture
dc.subject.expertCapital Instruments
dc.subject.expertPension Funds
dc.subject.expertInsurance Companies
dc.subject.expertPortfolio Management
dc.subject.expertFiscal Administration
dc.subject.expertEconomics of Education
dc.subject.expertDevelopment Banks
dc.subject.expertScaling-Up And Evaluation
dc.subject.expertResults-Based Monitoring And Evaluation
dc.subject.expertPublic Policy Evaluation
dc.subject.expertImpact Evaluation
dc.subject.expertPerformance Evaluation
dc.subject.adbUrban Development Finance
dc.subject.adbTrade Finance
dc.subject.adbSmall Business Finance
dc.subject.adbRural Finance
dc.subject.adbRoundtable on International Trade and Finance
dc.subject.adbRegional Development Finance
dc.subject.adbPublic Service Finance
dc.subject.adbPublic Finance
dc.subject.adbProject Finance
dc.subject.adbPrivate Finance
dc.subject.adbNonbank Financing
dc.subject.adbNon-Bank Financial Institutions
dc.subject.adbMunicipal Finance
dc.subject.adbLocal Government Finance
dc.subject.adbLocal Currency Financing
dc.subject.adbLimited Resource Financing
dc.subject.adbInternational Financial Institutions
dc.subject.adbInfrastructure Financing
dc.subject.adbIndustrial Finance
dc.subject.adbGovernment Financial Institutions
dc.subject.adbGovernment Finance
dc.subject.adbFinancing of Infrastructure
dc.subject.adbFinancial Sector Development
dc.subject.adbFinancial Regulation
dc.subject.adbEconomic evaluation
dc.subject.adbEconomic Forecast
dc.subject.adbResources evaluation
dc.subject.adbInput output analysis
dc.subject.adbCost benefit analysis
dc.subject.adbForeign and Domestic Financing
dc.subject.naturalUse tax
dc.subject.naturalTaxing power
dc.subject.naturalState of taxation
dc.subject.naturalTax revenue estimating
dc.subject.naturalTax planning
dc.subject.naturalSpendings tax
dc.subject.naturalSpecial assessments
dc.subject.naturalTax administration and procedure
dc.subject.naturalSales tax
dc.subject.naturalReal property and taxation
dc.subject.naturalProgressive taxation
dc.subject.naturalEffect of taxation on land use
dc.subject.naturalEffect of taxation on labor supply
dc.subject.naturalIntergovernmental tax relations
dc.subject.naturalInheritance and transfer tax
dc.subject.naturalEnergy tax
dc.subject.naturalRisk assessment
dc.subject.naturalEconomic policy
dc.subject.naturalEconomic forecasting
dc.subject.naturalCost effectiveness
dc.subject.naturalParticipatory monitoring and evaluation
dc.title.seriesICRIER Working Papers
dc.title.volumeNo. 351
dc.contributor.imprintIndian Council for Research on International Economic Relations
oar.themeSmall Medium Business
oar.adminregionSoutheast Asia Region
oar.authorSingh, Rajiva Ranjan
oar.authorBagchi, Anandita

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