Can we measure demonetisation’s impact on income tax collections?

News reports have quoted government officials making claims about a record increase in the number of income tax payers in 2016-17. Should such claims be seen as a success of demonetisation in forcing unscrupulous individuals to become a part of income tax net? An analysis of direct tax collection statistics and income tax department’s income tax return (ITR) filing data calls for scepticism about any immediate claims of demonetisation leading to a dramatic turnaround in India’s direct tax collections.

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