DNA Money Edit: India's long journey towards tax compliance, transparency

Prime Minister Narendra Modi's address to the nation on Tuesday from the ramparts of the Red Fort on the occasion of India's 71st Independence Day underlines the country's transition to transparency and tax compliance. Referring to the new goods and services tax (GST) regime that came into effect on July 1, Modi said the removal of check posts with the rollout had cut the time for transporting goods by 30%.

The demonetization drive may have drawn criticism, especially on slower economic growth, but the prime minister insists that it has helped India unearth huge chunks of black money. Rs 1.25 lakh crore that came to banks during the note ban has been unearthed as black money and another Rs 1.75 lakh crore is under scrutiny. After demonetization, 3 lakh shell companies have been detected, with 1.75 lakh such companies having been shut. What is equally important to note is that the government's push for a less-cash economy has led to a 34% increase in digital payments in the past one year. Modi is confident that digital currency would replace hard currency notes in India as the country's focus on digital economy starts producing results.

The number of new tax payers (filing income-tax returns) has more than doubled to 56 lakh this year, up from 22 lakh last year, according to Modi. This number has added to the confusion regarding the new tax-payer arithmetic. In May, finance minister Arun Jaitley had said that 91 lakh people were added to the list of tax-paying Indians. These figures are however way above the figure of 5.4 lakh quoted by chief economic adviser Arvind Subramanian last week.