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

Satadru Das, Lucie Gadenne, Tushar Nandi and Ross Warwick

No 16891, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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 (search for similar items in EconPapers)
JEL-codes: H25 H26 O23 (search for similar items in EconPapers)
Date: 2022-01
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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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