Government may introduce a tax on cash withdrawals exceeding Rs.10 lakh a year
The government might introduce a tax on cash withdrawals exceeding Rs 10 lakh a year, according to a report by The Times of India. The move will help the government clamp down on black money and promote digital payments.
Another proposal under consideration by the government is Aadhaar authentication for high-value cash withdrawals to help track tax returns, the report said. The Aadhaar authentication process will involve verification of the Unique Identification Number (UID) and a one-time password (OTP), so that the data is not misused.
In doing so, the government is going beyond seeking UID as is the case with deposits of over Rs 50,000 where PAN number has to be quoted.
The government is of the opinion that the majority of individuals and businesses do not need to withdraw over Rs 10 lakh in a year. Moneycontrol could not independently verify this story.
The consideration comes ahead of the Budget, which will be presented on July 5 by Finance Minister Nirmala Sitharaman.
The government is also planning to re-introduce the banking cash transaction tax (BCTT), which was imposed by the United Progressive Alliance (UPA) government in 2005 but was removed in 2009.
The Reserve Bank of India (RBI) has set-up a committee to review charges on ATM transactions. The central bank on June 6 lifted charges on NEFT National Electronic Funds Transfer) and RTSGS (Real-Time Gross Settlement) transactions.
Tax reforms to improve compliance are likely to be a crucial part of the newly-elected government Budget for 2019-20.
Top income tax payers could be rewarded with an invitation to tea with the Prime Minister or Finance Minister, according to a media report.