Why is demonetisation good?

Reduced instances of tax avoidance This is one of the major advantages of demonetization. The drastic move can considerably reduce tax avoidance. Whatever money is deposited or exchanged will be kept track of, by the income tax authorities.

What is the benefit of demonetisation?

While demonetisation imposed short-term costs, there have been important benefits via the above-mentioned increase in direct tax collections as a proportion of GDP, and the sharp, persistent rise in digital payments, said KV Subramanian, chief economic adviser to the government, in this Livemint article.

What is demonetization simple words?

Demonetization is the act of stripping a currency unit of its status as legal tender. It occurs whenever there is a change in national currency. The current form or forms of money is pulled from circulation and retired, often to be replaced with new notes or coins.

What is demonetisation and its features?

Tax Evasion Control Measure: Demonetisation is also known as the Government’s measure to control the mal-practices of tax evasion (avoiding tax illegally). 3. Channelising Savings into the Formal Financial System: Demonetisation facilitates in channelising savings of the people into the formal financial system.

What are the disadvantages of demonetization?

We have a long way to go to become cash less economy especially from point of view of security of digital transactions.

What is the reason of demonetization?

Demonetization can occur for several reasons, from a change in national currency to the retirement of older forms of money. Over time, several countries have implemented currency demonetization measures, albeit with varying degrees of success. Demonetization is an economic process in which a country’s currency unit is no longer legal tender.

What is the effect of demonitisation?

The impact of changing the legal tender status of a currency unit has a huge impact on the economic transactions that take place in an economy. Demonetisation can cause unrest in an economy or it can help in stabilizing the economy from existing problems. Demonetisation is usually taken by a country for various reasons.

What is the impact of demonetization?

Effects of Demonetization This policy aims to make the country corruption-free. It helps the government of a country to track the source of black money. This policy also stops the funding of illegal activities like terrorism, human trafficking, money laundering, etc.