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.
The banking system will have lot more cash in it and therefore,it's ability to support economy with low cost cash, that is cash whose capital is much lesser, would be much higher. Obviously with all these advantages, the social cost also on the system will go down. Therefore, the cash used for bribery, for counterfeit currency, for terrorism, for evading taxes itself will go down.
When this is seen along with many other reforms Government is bringing about particularly the proposed GST, the restrictions on cash spending subjected to PAN declaration, it itself is going to bring down the levels of corruption in society, it is going to bring down cash transaction in society and it's going to bring down levels of evasion as far as taxation is concerned.
(Excerpt from Finance Minister Arun Jaitley’s Statement made to media on 13 December 2016)
