Lok Sabha Question No. 1792 (UNSTARRED), answered on 2023-02-13
Subject: Effect of Demonetization
Ministry: FINANCE
Asked by: Rajiv Ranjan (Lalan) Singh, Dinesh Chandra Yadav

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS LOK SABHA UNSTARRED QUESTION NO. 1792 TO BE ANSWERED ON 13.02.2023

## Effect of Demonetization

## †1792. SHRI RAJIV RANJAN SINGH ALIAS LALAN SINGH: SHRI DINESH CHANDRA YADAV:

Will the Minister of FINANCE be pleased to state:

(a)  whether  demonetization  has  helped  the  Government  to  unearth  large  amount  of unaccounted money held by the people; and

(b)  if  so,  the  number  of  such  persons  identified  by  the  Government  and  the  action taken by the Government against them?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)

(a) & (b): Demonetization, inter alia, led to detection of black money, increase in tax collection and widening of tax base, as indicated below:

- i. During the period November 2016 to March 2017, the Income-tax Department conducted search and seizure actions in 900 groups leading to seizure of ₹ 900 crores, including cash of ₹ 636 crores and admission of undisclosed income of about ₹ 7961 crores.
- ii. Growth  rate  of  18%  for  F.Y.  2017-18  in  net  direct  tax  collections  over  F.Y. 2016-17, which was highest in the preceding seven financial years, indicated the positive impact of demonetization on the level of tax compliance in the country.
- iii. In F.Y. 2017-18, Personal Income-tax (PIT) Advance Tax collections increased by 23.4% and PIT Self-Assessment Tax by 29.2% over those for F.Y. 2016-17, corroborating the premise that demonetization and the subsequent use of bank deposit data by the Income-tax Department had a major impact on voluntary tax payments by the non-corporate / individual taxpayers.
- iv. A  growth  rate  of  25%  was  achieved  in  the  number  of  Income  Tax  Returns (ITRs)  filed  with  the  Income-tax  Department  during  F.Y.  2017-18.  It  was  the highest rate achieved in the preceding five years.
- v. During F.Y. 2017-18, the number of new ITR filers was about 1 crore 7 lakhs as compared to 85.51 lakhs during F.Y. 2016-17. In earlier  years,  the  number  of new  filers  was  between  50  lakhs  and  66  lakhs.  There  is,  therefore,  a  clear upswing in the new tax filers during the F.Y. 2016-17 and F.Y. 2017-18, which can be attributed to higher level of compliance due to transfer of cash into the formal channels as a result of demonetization.
- vi. A growth rate of 17.2% was achieved in the number of returns filed by corporate taxpayers during F.Y. 2017-18. It was more than 5 times the growth rate of 3% in F.Y. 2016-17 and 3.5% in F.Y. 2015-16.

Further,  demonetization  has  helped  the  Government  to  unearth  the  unaccounted money, held by the offenders, which got disclosed during investigation of cases by the Directorate  of  Enforcement  (ED)  under  Prevention  of  Money  Laundering  Act (PMLA), 2002 and Foreign Exchange Management Act (FEMA), 1999.

Under  PMLA,  investigations  have  been  taken  up  in  08  cases  wherein  107  persons were  found  involved  in  any  process  of  generation,  acquisition  and/or  projection  of unaccounted money. In these cases, proceeds of crime amounting to ₹191.68 crores have  been  attached  / seized and  05  accused  have  been  arrested.  Further,  13 Prosecution  Complaints  (PCs)  including  07  Supplementary  PCs  have  been  filed  in these  cases.  Similarly,  investigations  in  10  cases  against  19  persons  have  been initiated under provisions of FEMA wherein currency amounting to ₹2.99 crores have been seized. Further, 08 Show Cause Notices have been issued, out of which 05 have been  adjudicated.  During  adjudication,  penalty  amounting  to  ₹1.61  crore  were imposed. Further, seized currency amounting to ₹77.81 lakhs has also been ordered to be confiscated during adjudication.

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