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

Satadru Das, Lucie Gadenne, Tushar Nandi and Ross Warwick

Journal of Public Economics, 2023, vol. 224, issue C

Abstract: This paper investigates the tax compliance effects of India’s demonetization policy, which limited cash availability for a short period of time. Using administrative data on firms’ tax returns and variation in the strength of the demonetization shock across local areas, we find that demonetization increased sales reported to the tax authorities and tax payments. Investigating mechanisms, we show that demonetization led to a large increase in the use of electronic forms of payments. We argue that this likely strengthened tax authorities’ capacity to observe tax liabilities and enforce compliance.

Keywords: Tax compliance; Electronic payments; Demonetization (search for similar items in EconPapers)
JEL-codes: H25 H26 O23 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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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)
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:eee:pubeco:v:224:y:2023:i:c:s0047272723000890

DOI: 10.1016/j.jpubeco.2023.104907

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