Business

1.8 Million Additional Taxpayers Added Post Demonetisation And GST – Economic Survey

SHAHNAWAZ | 0
1879
| January 29 , 2018 , 15:12 IST

On day one of the budget session of Parliament, Government of India on Monday tabled the Economic Survey for the fiscal year 2017.

The Economic Survey is presented to both houses of the Parliament by the Union Finance Ministry ahead of the Union Budget. The Economic Survey, prepared under the Chief Economic Adviser is the flagship annual document of the Ministry of Finance on the annual economic development of the nation.

As per the Economic Survey tabled in the Parliament, about 1.8 million additional taxpayers have been added due to demonetization-cum-GST, representing 3 percent of existing taxpayers.

The report reads “ One of the aims of demonetization and the Goods and Services Tax (GST) was to increase the formalization of the economy and bring more Indians into the income tax net, which includes only about 59.3 million individual taxpayers (filers and those whose tax is deducted at source in 2015-16), equivalent to 24.7 percent of the estimated non-agricultural workforce. Has this happened and to what extent?”

“After November 2016, 10.1 million filers were added compared with an average of 6.2 million in the preceding six years,” the report adds.

The report also undertook a regression analysis to account for pre-existing trend growth in new tax filers. Taking seasonality into account it was found that there is a 0.8 percent monthly trend increase in new tax filers. The level of tax filers by November 2017 was 31 percent greater than this trend.

The survey concludes that about 1.8 million additional taxpayers were added due to demonetization-cum-GST, representing 3 percent of existing taxpayers. Further analysis suggests that new filers reported an average income, in many cases, close to the income tax threshold of Rs. 2.5 lakhs, limiting the early revenue impact. As income growth over time pushes many of the new tax filers over the threshold, the revenue dividends should increase robustly.