Govt may tax cash withdrawals
New Delhi: Among many proposals to incentivise digital transactions, a ‘cash tax’ is being considered by the government.
If the proposal is cleared, it may figure in the February 1 budget. The proposal could be made in the forthcoming Union Budget for fiscal year 2017-18, which is mainly aimed at getting hold of black money holders and lower cash transactions in the economy.
The tax imposed by former finance minister P Chidambaram from June 1, 2005 was withdrawn from April 1, 2009 on the ground that the tax department had many other instruments to nab those having black money, replacing the need of Banking Cash Transaction Tax (BCTT).
The Special Investigation Team (SIT) on black money has already recommended a ban on cash transactions above `3 lakh and a Rs 15 lakh limit on individual cash holding. The Tax Administration Reform Commission (TARC), headed by Parthasarathi Shome, had also recommended the reintroduction of BCCT.
Notably, Digital payments transactions in December last year were 43% higher than in November and totalled 958 million, according to central bank data.