Question

what is the connection between cashless payment and tax revenue . ( conceptual framework for this)

Answer 1

For understanding this concept more clearly,

We will take the assumption that people try to evade tax and for this, they did not record the transactions in the books of accounts.

Now

Please understand that, if they did not record the transactions, then the tax authorities will trace them but tracing cash transactions is a very difficult task and in many cases, it is even not possible to trace the cash transactions as it is very easy to hide the pieces of evidence of cash transactions and cash.

But in case of cashless transactions, hiding the evidences is not an easy task and they can come to the notice of tax authorities easily. So, In cashless transactions, people generally do not hide the transactions and do not evade taxes. Because in a situation, they hide it and later it comes to the knowledge of tax authorities that they are evading taxes then penalties along with fine may be imposed on them.

So, I think you are clear now that

Cashless Transactions helps in increasing tax revenue and reducing tax evasions.

Please give Thumbsup, if you like the answer.