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 was aimed at reducing reliance on cash transactions and promoting digital payments, which strengthens the formal financial system. Option (D) contradicts this objective, as demonetisation encouraged savings to be directed towards the formal economy rather than away from it. It also aimed to improve tax compliance by reducing tax evasion and discouraging the circulation of black money