Hinting at lower Jaitley said unaccounted wealth is coming into the system and the enforcement agencies are keeping a close eye on cash accumulations.
Since demonetisation was announced on Nov 08, the money being deposited has to be accounted for and taxes paid - 50 per cent on voluntary disclosures of unaccounted money and 85 per cent for any failures.
"So much money...operating as loose cash in the system has today come into the banking system," he said. "It has to be accounted for. Where taxes have not been paid will now be recovered."
"Once they are substantially digital they get caught in tax net," he said. "Therefore the future taxation level would be much higher than what is currently being collected. This would also enable the government at some stage to make taxes more reasonable which will apply to both direct and
Jaitley said future transactions would be substantially digital as India moves towards a less-cash society.
Demonetisation together with other reforms, particularly the
"It is going to bring down cash transaction in society and it's going to bring down levels of evasion as far as taxation is concerned," he said.
Jaitley said it has come to the notice of the government that some unscrupulous people, including some in the banking system and others, have been trying to subvert the system once again and have accumulated large amounts of cash unlawfully.
"Obviously there is a breach of law in this and this is a step which hurts the economy. And therefore all agencies have an eye on this. They will investigate this matter and all those who are indulging in this malpractices will have to pay a very heavy price for what they are doing," he added.