Asserting that the November 8 demonetisation exercise of high value banknotes will bring ‘big’ benefits to the economy, Finance Minister Arun Jaitley on Tuesday held out a ray of hope for the struggling common man that tax rates could come down at “some stage” due to higher tax collections from digital payments.

“Future transactions 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 told mediapersons here.

Advantage banks With this demonetisation move, the banking system will have lot more cash in it and therefore, its ability to support economy with low-cost cash, that is cash whose capital is much lesser, would be much higher, he added.

“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,” he said. When this is seen along with many other reforms the government is implementing, particularly the proposed goods and services tax (GST), the restrictions on cash spending subjected to PAN declaration, are going to bring down the levels of corruption in society, bring down cash transactions in society and bring down levels of evasion as far as taxation is concerned, he added.

Jaitley also urged his “friends in Congress party, and the entire Opposition” to rise above slogans and look at the “positive advantages” that these changes in system in the long run are going to bring to the economy as a whole.

"Therefore, from the national perspective, I would appeal to the Opposition to join this campaign rather than create obstruction and fail to understand what the real purpose and the import of this campaign really is,” Jaitley said.

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