Does going cashless make you tax-rich? Evidence from India's demonetization experiment

Satadru Das, Lucie Gadenne, Tushar Nandi and Ross Warwick
Additional contact information
Satadru Das: Reserve Bank of India
Tushar Nandi: Indian Institute of Science Education and Research (IISER), Kolkata
Ross Warwick: Institute for Fiscal Studies

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: This paper investigates the effect of electronic payments technology on firms' tax compliance in a large developing economy. We consider India's demonetization policy which, by limiting the availability of cash, led to a large increase in the use of electronic forms of payments. Using administrative data on firms' tax returns and variation in the strength of the demonetization shock across local areas, we find that greater use of electronic payments leads to firms reporting more sales to the tax authorities. This effect is strong enough to explain roughly half of the large (11%) increase in reported sales observed during demonetization.

Keywords: tax compliance; electronic payments; demonetization JEL Classification: H26; O23; H25 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-cwa, nep-iue and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Does going cashless make you tax-rich? Evidence from India’s demonetization experiment (2023)
Working Paper: Does going cashless make you tax-rich? Evidence from India's demonetization experiment (2022)
Working Paper: Does going cashless make you tax-rich? Evidence from India's demonetization experiment (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:1393

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