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Tax Collection Up After Notes Ban, Says Arun Jaitley

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Finance Minister Arun Jaitley said a large portion of currency has already been replaced.

Highlights

  1. Till December 19, income tax collection up 14.4%, says Arun Jaitley
  2. Excise duty collection went up 43.5%
  3. Economy will do much better going ahead, adds finance minister
Finance Minister Arun Jaitley today said clear results from the notes ban are now coming in, and tax collections are up. So is the life insurance business, petroleum consumption, tourism and investments in mutual funds, the minister said, countering naysayers who have predicted that demonetisation will have a severely adverse effect on the economy.

"What was being predicted by the critics has to have a rationale with the revenue collections. Assessments can be unreal but revenue is real," Mr Jaitley said, adding that "in all the categories (of indirect tax) till November 30, there has been a significant increase in tax collection." And till December 19, income tax collection has gone up by 14.4 per cent, he said.

Giving a breakdown of central indirect tax collection, Mr Jaitley said the excise duty collection went up by 43.5 per cent, service tax by 25.7 per cent and customs duties by 5.6 per cent. Even on a month-on-month basis, the tax collection this November was higher, he said.

"We have tried to check for the month of November which could have been adversely impacted by currency replacement. Compared to the November of 2015, on a year to year basis, all the collection of all three indirect taxes in November of 2016 is much higher," the finance minister said, speaking a day before the deadline for depositing old Rs 500 and Rs 1000 notes in bank accounts ends.

It will also be 50 days since Prime Minister Narendra Modi announced a ban on November 8 on Rs 500 and Rs 1000 notes, aimed at eliminating corruption and black money. The move took 86 per cent money or Rs 15.44 lakh crore out of circulation and critics have predicted an economic collapse with a massive cash crunch disrupting daily life and people, who have had to struggle to get new currency notes, holding back on spending, except for immediate and urgent needs.

Opposition parties have planned campaigns to remind PM Modi of his promise that the cash crunch which has followed the demonetisation would be eased in 50 days.

Mr Jaitley today said a large portion of the currency has already been replaced and with a lot more money in the banking system, the ability of banks to lend has increased.

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Also, he said, "The RBI has very large currency available...more notes of Rs 500 are being released."

Cash, the minister said, has an anonymity attached with it. "What comes into the banking system gets identified with the person. Therefore its impact on taxation and revenue collection is being seen."

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