ForumIAS LATEST
- Prelims Test Series (PTS) for Prelims 2027 starts 11th Oct. 2026 Click Here to know more →
- [Pre-order] Ethics Redbook 3rd Edition: Delivery starts from 10th October onwards Click Here to Read More →
- 21 Sept. | Forum Residential Coaching (FRC) for UPSC preparation Click Here to know more →
- 21 Sept. | GS Advance Program (GSAP) for UPSC 2027 Mains starts from 10th Oct. Click Here to Read More →
What demonetisation did to tax collections
Context
Effect of Demonetisation
Demonetisation’s effect on tax collections
- Net collections have increased by 17.1% in the just concluded fiscal year, to Rs. 9.95 lakh crore. In FY15 and FY16, India’s direct tax kitty witnessed growth of just 8.9% and 6.9%. But seen from a historical perspective, a 14% or even 17% annual increase in direct taxes isn’t extraordinary for the Indian economy.
- For instance, in fiscal year FY14 (under the UPA government), direct tax collections rose 14.3%. In FY11, they had expanded 18%. Clearly, these numbers were achieved without any tinkering with high-value currency notes
- Tax buoyancy: Tax buoyancy has picked up post-demonetisation. In the seven years from FY08 to FY14, direct tax buoyancy hovered between 0.5 and 1.1 times, averaging out at 1 for the period. Direct tax buoyancy doubled from 0.6 times in FY16 to 1.3 times in FY17 and accelerated further to 1.7 times in FY18
- The number of IT return filings zoomed to 6.84 crore by the end of FY18. That’s a 57% increase in the last two years (2.48 crore new filings)
