Pre-budget Expectation – Demonetisation:
In November, Prime Minister Narendra Modi, in a surprise announcement, scrapped INR 500 and INR 1000 currency notes, taking away their legal tender status from midnight of November 8. The government has pitched the move as part of a broader strategy to clamp down on India’s bustling parallel economy where deals take place in cash, as also a step towards ushering India into a “less-cash” economy.
Demonetization has been one of the most radical reforms which India has witnessed after independence. And it has been the world’s largest currency culling exercise with people given 50-days to deposit old notes in banks and post-offices which is by December 30.
It was thought out, started and implemented with the multiple objectives, being, curbing black money, widening the tax bracket and counterfeit currency management. In wake of demonetization, certain amendments were made under the Income-tax Act to ensure that defaulting tax payers are subjected to higher tax rate and more stringent penalty provisions. According to many economic surveys people of the country feel that, demonetisation will certainly increase the tax collections and will bring down the inflation, especially in the real estate and in the luxury space.
There were certain measures as a branch of this mammoth exercise, seeking the people with black money to deposit in various schemes which will be used for specified purposes by the government, such as, Prime Minister’s Krishi Kalyan Yojana – which was thought to incentivise people to declare the black money and be clear from it. However, this may need some documentation and filings, which can be easily complied with the help of a Chartered Accountant.
Critics have spared no punches about the move for causing pain to unsuspecting people resulting in job losses, as well as forcing long queues at ATMs and bank branches, though the general public seemed to be fully supportive to the national cause.
Also, there is a great expectation from the different corners of the society that government will come up with some favourable amendments in tax laws, as Demonetisation has increased the size of the government pockets. Also, it would be a good political move to offer many sops to bring out the general gloom of demonetisation in the minds of the people, of course it looks the common man is not too worried about it, especially in the midst of other things such as GAAR, GST, etc.