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)
Ross Warwick: Institute for Fiscal Studies

No 943, Working Papers from Queen Mary University of London, School of Economics and Finance

Abstract: This paper investigates the effect of electronic payment technology on tax compliance in a large developing economy. We consider India's demonetization policy which, by limiting cash availability, 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. Our estimates imply that the shift to electronic payments increased reported sales by 5% despite demonetization's negative effect on economic activity.

Keywords: tax compliance; electronic payments; demonetization (search for similar items in EconPapers)
JEL-codes: H25 H26 O23 (search for similar items in EconPapers)
Date: 2022-10-21
New Economics Papers: this item is included in nep-des, nep-iue, nep-mac, nep-pay and nep-pbe
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:qmw:qmwecw:943

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