All banned notes deposited with banks may not be legitimate: Jaitley

New Delhi, Aug 31 (IANS) In the backdrop of the RBI's report stating that 99 per cent of the demonetised cash had come back into the banking system, Finance Minister Arun Jaitley on Thursday said "all of it may not be accounted money".

"Demonetisation helped in bringing transparency in the system. Money getting back into banking system -- not necessarily legitimate money," Jaitley said here at the inaugural session of 'India Summit 2017' organised by The Economist magazine.

The Reserve Bank of India (RBI) on Wednesday revealed that of the Rs 15.44 lakh crore of notes taken out of circulation by the demonetisation of Rs 500 and Rs 1,000 notes in November 2016, Rs 15.28 lakh crore, or almost 99 per cent, had returned to the system by way of deposits by the public.

The Minister, however said that demonetisation achieved the overall objectives for which it was brought in.

"It helped in bringing informal economy into a formal one. Demonetisation helped in widening tax base which in turn led to increase in the direct and indirect tax collections.

"Note ban has ended anonymity surrounding money. Demonetisation shook the system," he added.

"We benefited on direct taxes front on the back of note ban. Twenty five per cent more people have filed Income Tax returns. Significant additions to July Goods and Services Tax (GST) collections is seen.

"At two-thirds GST returns, we have surpassed the target. GST collections in first month of its implementation was more than the government's expectations," Jaitley noted.

He said that as a long-term note ban impact, spending would get a boost as revenues would go up.

Talking about GST, Jaitley said he expected convergence of tax rates in the coming days.

"I see two standard rates converging into one in future. The GST Council may decide on convergence of rates at appropriate time," he said.

Jaitley, however, said that having a single standard GST rate would be inflationary for a disparate range of consumers, as one tax rate was inequitable.

He added that GST implementation was quite smooth without any major glitches.

Touching upon the resolution of non-performing assets (NPAs) of public sector banks (PSBs), he said that it was not possible to have a surgical solution to bad loans.

"Government is trying to resolve the NPA issue of PSBs on a priority basis and has taken various steps in this regard," he said.

Jaitley said the government was actively considering PSB merger as banking decisions need to be taken on commercial considerations.

He added that depending on affordability, the recapitalisation needs of banks would be met.