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Demonetization and its After-Effects



Modi Government has taken a historic step of demonetizing high value currency notes. This step has been taken at the right time from the government prospective i.e. exactly in the middle of their tenure. Most people are facing problems in this transformation, but the major chunk is satisfied and supporting our Prime Minister. Opposition is pressing that PM should give his statement in Parliament, but let me assure you again, he is man of words and once he will speak nobody else will be able to question him. What we call it “Toofaan se pehle ki shanti”.

Whatever might happen in parliament, the fate of Indian Economy had already been written on November 08, 2016. Believe me, India will shine brighter than a diamond, we earlier called it golden sparrow, it’s time to call it a diamond eagle. The demonetization is certainly going to have far reaching positive impact:

1. The interest rates of loans granted by the Banks/NBFCs and other financial institutions are set to fall, leading to increase in the purchasing capacity of a common. House for everyone by 2022 shall not remain a dream anymore. In this scenario we can expect a huge boom in the real estate sector specially housing projects.

2. With huge jump in tax revenue of Government, it is most likely that the money shall be utilized in betterment of public utilities and ensure higher standard of living for a common man. World class infrastructure, better roads, better and safe public transport, Insurance facilities, world class medical facilities shall become common in India. Swachh Bharat, Digital India is not too far.

3. They say that Government is encouraging Tax Terrorism. An Indian, who had been ruled by foreign power for over 200 years, has the general tendency to think of his individual benefits first. He forgets to fulfill his duty towards nation, by paying right amount of tax on his income. To bring that behavioral change, hard steps are required. We understand all of us do tax planning but that doesn’t mean that we abstain from paying proper taxes. How can we expect better facilities when we ourselves do not contribute to our nation?

4.  As a profession I foresee that demonetization shall also result in increasing the employment opportunities. With the money flowing in and loans becoming cheaper, it is but obvious that the GDP of our nation is going to increase. This will lead to more and more startups and new units which will generate huge number of vacancies and world class entrepreneurs. 

5.   It is most likely that the professionals like CA, CS, CWAs are set to gain from demonetization. With their clients becoming tax complied, worth of these professionals will certainly increase. Now we will witness debates more on point of law which will actually test the real knowledge of a professionals. Demonetization will help the professionals go hand in hand with the government to a very large extent. 

6. Demonetization has inculcated a fear in the mindset of a common man as well as government officers. Now the tendency that “What Max will happen” will go away leading to compliance of each and every step taken by the government. This fear to certain extent was required to make people tax complied. Once they start reaping the fruits of this strictness, they will certainly enjoy being cash-less economy. Let’s not forget that in India people follow traffic rules due to fear of challans and not because they make them safe on road. Same analogy can be applied on the tax laws.   

Looking at the benefits which demonetization is going to give to our nation, we all should step ahead and say big No to Black Money. Enough is enough; those who have been sucking the economy like an insect for years, now have to pay a huge cost for it.

by:
Keshav R Garg
(B.Com, FCA, CS, ISA (ICAI))
Faculty for GST: Indirect Tax Committee of ICAI
Author: Bharat's GST Ready Reckoner
            A Handbook on GST
Adviser for GST: Industries Association of Chandigarh 
Member: Indirect Tax Committee of CII, PHDCCI, MyGst.MyTax Foundation
Address: 3328, Sector 27 D, Chandigarh, India - 160 019
Phones: +91-172-461-3328, +91-98880-90008
Mails: mygst.mytax@gmail.com, keshavgarg@kdai.in   


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