DEMONITISATION

OVERVIEW:
Demonetization of currency means discontinuity of the particular currency from
circulation and replacing it with a new currency.
In the current context it is the banning of the 500 and 1000 denomination currency notes
as a legal tender.
The governments stated objective behind the demonetization policy are as follows;
1. an attempt to make India corruption free
2. to curb black money
3. to control escalating price rise
4. to control escalating price rise
5. to make people accountable for every rupee they possess and pay income tax
return
6. an attempt to make a cashless society and create a Digital India.

The government has taken few steps in this direction much before its November 8, 2016
announcement.
1. urged people to create bank accounts under Jan Dhan Yojana. As on August 30,
it has opened 30.09 crore accounts and the money kept in these accounts are Rs
65,800 crore
2. the government initiated the Income Disclosure Scheme 2016 a tax declaration of
the income and had given October 30, 2016 deadline for this purpose. Through
this method, the government was able to mop up a huge amount of undeclared
income.worth 65,250 crore.

The demonetization policy is being seen as a financial reform in the country but this
decision is fraught with its own merits and demerits

Facts and Figures:

A total of Rs 15.44 trillion worth of Rs 500 and Rs 1,000 currency notes were withdrawn.
These notes constitute 86.9% of the value of total notes in circulation at that time.
the estimated value of the currency that returned to system at Rs 15.28 trillion or close to 99% of the
currency notes demonetised
acc. To The Reserve Bank of Indias annual report:
I. about 89 million pieces of the 1,000 note (value of 8,900 crore) didnt come
back. To put that in perspective, in the previous year, 6,326 million pieces of
1,000 notes valued at 6,32,600 crore were in circulation
II. The Reserve Bank of India (RBI) spent a whopping Rs 7,965 crore to print new currency
notes from July 2016 to June 2017, a jump of 133 per cent against Rs 3,421 crore in the
same period of the previous year
 III. The number of returns filed as on August 5, 2017 have registered a rise of 24.7% compared to
a growth rate of 9.9% in the previous year.
IV. The total number of returns (electronic plus paper) filed during the entire fiscal year 2016-17
was 5.43 crore which is 17.3% more than the returns filed during fiscal year 2015-16.
V. For 2016-17, 1.26 crore new taxpayers (return filers plus non-filers making tax payments) were
added to the tax base (till June 30, 2017).

VI. 19% growth in direct tax collections. Collection of advance tax under personal income tax
showed a growth of about 41.79% over the corresponding period in 2016-2017; collection of
self-assessment tax under personal income tax showed a growth of 34.25%.
According to the income tax department, the number of e-returns of individual taxpayers filed till August
5 increased to 2.79 crore from 2.22 crore filed during the corresponding period of last year, registering
an increase of about 57 lakh returns, or 25.3%.