Number of tax payers rose by nearly one crore the year after demonetisation, report says

The number of personal income tax payers increased by nearly 1 crore in the year after demonetisation, data tabled in the Lok Sabha showed, reported Business Line.

The number of corporate tax and personal income tax payers also increased over 32.5 per cent and around 60 per cent, respectively, during the first 7 years of the Narendra Modi government.

A written response by the Minister of State in the Finance Ministry Pankaj Chaudhary, in the Lok Sabha did not give a specific reason for the rise in number of income tax payers.

Key factors

It could, however, be attributed to a number of factors, including pace of formalisation of the economy, better use of technology, tracking high spenders and deposit of demonetised notes in banks, said officials. Further simplification of return filings and ease in compliance also helped add to the number of taxpayers.

Data show that in the fiscal year 2016­17 (assessment year 2017­18), the number of personal income tax payers was over 5.10 crore. In the same year, on November 8, Prime Minister Narendra Modi announced the demonetisation of ₹500 and ₹1,000 notes. On the same date, new notes of ₹500 and ₹2,000 were issued.

People were given the option to exchange old notes with new ones on or before December 30, 2016.

People who were outside India during November 9­December 30, 2016 were given the opportunity to deposit old notes by March 31, 2017.

Personal income tax

The government had to later face criticism when in August 2017 RBI reported that over 99 per cent of the old notes had returned to the system. However, tax officials say this helped in tracking depositors which, also helped in adding more tax payers.

Meanwhile, data given by the Finance Ministry in the Lok Sabha showed that personal income tax collection increased to over ₹6.73­lakh crore in FY22 from ₹2.58­lakh crore, a growth of over 160 per cent.