The following are the main features of demonetisation:
1. Tax Administrative Measure: Demonetisation is regarded as a measure of tax administration. People with cash-in-hand on account of their declared income readily deposited their cash in banks and got it exchanged for new currency. On the other hand, those who had black money had to come forward to declare their unaccounted cash and pay taxes along with a penalty
2. 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. As a result, some of the new deposits can be used for launching new profitable schemes and providing loans at lower interest rates.
4. Creating Less-Cash Economy: Demonetisation helps in effecting (bringing about) understanding in people for channeling more savings through formal financial system and hence improving more chances of less cash economy. Consequently, despite the limitations (non-availability of Cell Phones, Point-of Sale Machines— POS Machines, Internet Connectivity, etc.) of digitalising transactions, it helps in introducing formal economy.
