Question

Which of the following is NOT a feature of demonetisation?

• A. It leads to the creation of a less-cash or cashless economy by channeling more savings through the formal financial system and improving tax compliance.
• B. It is interpreted as a shift on the part of the government indicating that tax evasion will no longer be tolerated or accepted.
• C. It is viewed as a tax administration measure.
• D. It led to tax administration channelising savings away from the formal financial system.

Hint:

Demonetisation aimed to increase formal financial system use.

Answer 1

The Correct Option is D

Demonetisation sought to decrease reliance on cash and boost digital payments, thereby reinforcing the formal financial system. Option (D) conflicts with this goal, as demonetisation channeled savings into, not away from, the formal economy. Furthermore, it aimed to enhance tax compliance by curbing tax evasion and limiting the circulation of illicit funds.