Finance Minister Arun Jaitley said on Thursday that for the period between April 1 and December 19, direct tax collections grew at a net rate of 13.6% year-on-year (y-o-y). This is lower than the net y-o-y growth of 15.1% for April 1 to November 30, the data for which were released earlier this month.
There were fears with the announcement of demonetisation by Prime Minister Narendra Modi on November 8 the move would lead to a substantial fall in direct tax collections. Jaitley said all the data available, including that of indirect taxes and rabi crop sowing, showed the situation was better than what the critics of demonetisation feared.
Jaitley was addressing journalists on the government’s demonetisation drive in New Delhi on Thursday, a day before the December 30 deadline for depositing old Rs 500 and Rs 1,000 notes in banks.
“Direct tax figures of income tax till December 19 are now available. If one factors in very large quantum of refunds — because these days refunds are also made immediately — the net increase is 13.6% till December 19,” Jaitley said.
Rubbishing critics, the finance minister said the effects of demonetisation were not as adverse as was predicted. He said the remonetisation process has substantially advanced, without a single incident of unrest anywhere in the country.
Jaitley said a large part of the Rs 15.4 lakh crore of old high-denomination notes in circulation on November 8 have already been replaced and the Reserve Bank of India (RBI) has a very large amount of currency available to support any liquidity need.
“Already, a large part of benefits of this historic move are visible. A lot more money has come into the banking system,” he said.
However, according to data released by RBI till December 19, only about Rs 5.9 lakh crore has been remonetised – 29% of the amount demonetised. Economic Affairs Secretary Shaktikanta Das had said earlier this month that the Centre expects 50% remonetisation by December-end.
Jaitley said that indirect tax collections soared 26.2% between April 1 and November 30, with revenue from excise jumping 43.5%, that from service tax by 25.7% and customs by 5.6%.
Replying to questions on when customers can see easing of curbs on cash withdrawals, Jaitley said: “That is a decision the central bank will take in consultation with everyone.”
Asked about fears expressed by critics that the note ban decision will hit the economy and the GDP growth, he said: “I think one is clear there could have been some adverse impact for a quarter or so. It doesn’t appear to be as adverse as it was being predicted... But, you have to plan the economy in the long term, the changes in the system which are coming about will certainly mean more money in the banks, more money with the revenue and probably a much larger and cleaner GDP.”
Business Standard New Delhi,30th December2016
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