Demonetisation: FM Arun Jaitley hints at lower tax rates

New Delhi: Citing the advantages of the demonetisation, Finance Minister Arun Jaitley said on Tuesday that higher tax revenues would enable the government at some stage to make taxes more reasonable which will apply to both direct and indirect taxes.

"Future transaction would be substantially digital and once they are substantially digital, they would come in the tax net. Therefore, the future taxation level would be much higher than what is currently being collected. This would also enable the Government at some stage to make taxes more reasonable which will apply to both direct and indirect taxes, " Jaitley said.

The Finance Minister also said that future transactions would be substantially digital as India moves towards a less-cash society.

"There are economic costs of dealing in cash, there are social costs of dealing in cash. These are the costs which the system has to bear," he said, adding that demonetisation was a step in the direction of "less cash economy".

"It`s our strategy that from high cash-dominated economy, we should become a less cash economy where the amount of paper currency comes down. Cash will still exist and there would be a greater digitisation," he said.

The Finance Minister said the government is "rapidly completing remonetisation exercise".

"Everyday RBI is injecting a large amount of currency into the banking system as part of its remonetisation exercise. Significant amounts are going to be injected in next three weeks which are gradually bringing the pressure down," he said.