The Survey pointed out that one of the aims of demonetisation and GST was to increase the formalisation of the economy.
New Delhi: The Economic Survey on Monday said that most of the new tax filers after demonetisation and GST reform are in slab of Rs 2.5 lakh income who don’t need to pay any tax as income upto Rs 2.5 lakh is exempted.
“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,” said the Survey.
However, it said that as income growth over time pushes many of the new tax filers over the threshold, the revenue dividends should increase robustly.
The Survey pointed out that one of the aims of demonetisation and GST was to increase the formalisation of the economy and bring more Indians into the 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 per cent of the estimated non-agricultural workforce.
Taking into account the pre-existing trend growth in new tax filers through regression analysis, the survey carried out a rigorous assessment of the impact of demonetisation.
“Taking seasonality into account it is found that there is a 0.8 per cent monthly trend increase in new tax filers (annual growth of nearly 10 per cent). The level of tax filers by November 2017 was 31 per cent greater than what this trend would suggest, a statistically significant difference,” said the survey.
“This translates roughly into about 18 lakh additional taxpayers due to demonetisation-cum-GST, representing 3 per cent of existing taxpayers,” it said.
The Survey said that the government measures to curb black money and encourage tax formalisation have increased personal income tax collections substantially (excluding the securities transactions tax). “From about 2 per cent of GDP between 2013-14 and 2015-16, they are likely to rise to 2.3 per cent of GDP in 2017-18, a historic high,” it said.