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Text of the Article on Demonetisation by the Union Finance Minister Shri Arun Jaitley

News and Press Release - Dated:- 9-1-2017 - Press Information Bureau Government of India Ministry of Finance 08-January-2017 14:41 IST Following is the full Text of the Article entitled Demonetisation - A Look Back at the last Two Months by the Union Finance Minister Shri Arun Jaitley: Two months have passed since the Prime Minister announced the decision that high denominational currency notes would cease to be a legal tender. Subsequently those notes have been demonetised. When 86% of a countr .....

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omy and black money. It s first decision was to constitute SIT under the directions of the Supreme Court. The Prime Minister had proposed to the G-20 at Brisbane that international cooperation in sharing information with regard to base erosion and profit shifting should be expedited. The arrangement with the United States furthered this object. The NDA Government completed its agreement with Switzerland that w.e.f. 2019, details of assets held by Indian citizens in Switzerland and vice versa wou .....

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equirement for cash transaction beyond rupees two lakhs put hurdles on expenditure through black money. The Benami law legislated in 1988 and never implemented. It was amended and has been put into action. The GST, which is scheduled to be implemented this year, will provide for better indirect tax administration and being a more efficient law will check tax evasion. The demonetisation of high denominational currency notes was the big step in the same direction. 2. The new normal In the year 201 .....

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ant society. Expenditure required for poverty eradication, national security and economic development have to be compromised with on account of tax non-compliances. For seven decades the Indian normal has been to undertake transactions partly in cash and partly in cheque. Pucca and Kachha accounts are a part of the business language. Tax evasion has been considered as neither unethical nor immoral. It was just a way of life. Several Governments have allowed this normal to continue even though th .....

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lace with or without cash but excessive cash as a medium of exchange is favoured by the underground economy. It results in non-compliance in the matters of tax payments which creates an unjust enrichment in favour of the evader as against the poor and the deprived. Mountains of cash money reach tax havens through the hawala route from the original paper currency. Cash facilitates real time untraceable payments. Cash is the medium which funds bribery, corruption, counterfeit currency and terroris .....

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own till Governments take active steps to reduce the quantum of paper currency. 4. The magnitude of the decision The Prime Minister s decision to replace the high denominational currency and eventually demonetise it required both courage and stamina. The implementation of the decision carried pain. It can lead to short term criticism and inconveniences. Drop in economic activity on account of the currency squeeze during the remonetisation period would have a transient impact on the economy. The .....

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entitled to tax this money. In any case, the amendment to the Income Tax Act itself provides that the said money, if voluntarily declared or if involuntarily detected, would be liable for differential and high rates of taxation and penalty. 5. The situation today The period of pain and inconveniences is getting over. Economic activity is being restored. The banks today admittedly have a lot more money available in order to lend for growth. Since this money constitutes low cost deposits with the .....

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