Demonetisation will push up tax collections: Jaitley

New Delhi, Nov 9 (IANS) Finance Minister Arun Jaitley on Wednesday said tax collections will go up considerably in the medium-to-long term as more people will come under the tax net due to the demonetisation of Rs 500 and Rs 1,000 notes.

“In the medium and long term, direct and indirect tax collection will increase. Lot of currency outside the banking system will perforce will have to get into the system,” Jaitley said at a press briefing here.

“But how much currency in the market comes back into the banking system, we will come to know only with time,” he said, adding that he expected the supply of high denomination currency notes to stabilise in three-four weeks.

In a surprise move, the government on Tuesday announced that Rs 500 and Rs 1,000 currency notes will be demonetised. Instead, new notes of Rs 500 and Rs 2,000 denomination will be issued.

Finance Secretary Ashok Lavasa also clarified on Wednesday that new currency notes of Rs 500 and Rs 2,000 value will be available for people to withdraw from ATMs from Friday.

“There will not be any problem as it (Rs 500 and Rs 2,000 notes) will be available from Nov 11 in all ATMs,” Lavasa said.

The government had announced on Tuesday that while ATMs will be shut for two days, once they reopen on Friday, a person can withdraw up to Rs 2,000 per day through a single card till November 18.

Thereafter, the limit will be increased to Rs 4,000 per day.

“The Reserve Bank will closely monitor the fresh notes that will be issued. The cash withdrawal restrictions will ease once supplies of new Rs 2,000 and Rs 500 notes improve,” Lavasa added.

As per data available with the Reserve Bank of India (RBI), Rs 17,54,000 crore worth of currency is in circulation in India, of which 45 per cent is accounted for by Rs 500 notes and 39 per cent by Rs 1,000 notes.

In other words, Rs 16,32,000 crore worth of currency stands demonetised.

–IANS

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