Tax collections are up significantly due to the demonetisation move, with the gross direct tax collections rising 14.4 per cent till December 19, compared with the same period in the previous year, and the indirect tax collections growing 26.2 per cent in the same period, Union Finance Minister Arun Jaitley said on Thursday.
The Reserve Bank of India has a large stock of currency and more Rs 500 notes are being released, he asserted.
“Already, a large part of the benefits of this historic move are visible. A lot more money has come into the banking system. Cash has an anonymity attached to it. What comes into the banking system gets identified with the person and, therefore, its impact on taxation and revenue collection is already being seen,” he pointed out.
The net direct tax collections, after accounting for refunds, grew by 13.6 per cent. The overall growth in the advance tax collections was 14 per cent, of which, growth in TDS collections was 15 per cent, and the self-assessment tax collections witnessed a growth of 21 per cent.
“In the central indirect taxes, the increase is 26.2 per cent till November 30. And this include excise duties increasing by 43.5 per cent, service tax increasing by 25.7 per cent and customs duties by 5.6 per cent, he said.
“We have also tried to check up the figures for November, which could have been adversely impacted on account of the currency replacement compared to November of 2015. On a year- to-year basis, in the November of 2016, all the three indirect taxes, the collection is much higher,” he observed.
Despite what critics of the demonetisation were saying, rabi crop sowing was higher than last year. Also the life insurance business, international tourism, air passenger traffic, petroleum consumption and the flow into mutual funds had increased by 11 per cent, he said.
Amongst the currency that was in circulation on November 8, when demonetisation was announced, a very large part had been replaced and would continue to be replaced to the extent that the market required that currency, he said. “More and more notes of Rs. 500 are also being released through the banking and post offices and, therefore, we can see a lot of currency coming into recirculation, which is enabling the banking system and ATMs to further augment the supply itself.”
