Financial Daily from THE HINDU group of publications
Friday, Mar 18, 2005

News
Features
Stocks
Port Info
Archives
Google

Group Sites

Industry & Economy - Taxation


Cash withdrawal tax clause: Govt adding to its tax burden?

Mohan Padmanabhan

Kolkata , March 17

The much slammed Banking Cash Transaction Tax (BCTT) seems to have thrown up a whole new dimension, which questions the efficacy of the existing Government machinery to check black money transactions.

Direct tax experts feel that the Finance Minister, through the insertion of a new clause in the definition of a "person" (withdrawing such cash) in the relevant chapter of the Finance Bill 2005, has attempted to cast the net wide within Government's own establishments to catch a whiff of the black money trail. Does it not sound like scoring one's own goal?

According to Mr Narayan P. Jain, tax practitioner and lawyer, the cash withdrawal tax provisions, through the above insertion , will now apply to both Union and State Government offices, which, in effect, questions the time-tested internal checks and balances put in place, like internal audits, to prevent dubious cash transactions in Government offices.

Citing the proposed move to make the tax applicable to Union and State Governments as totally misconceived, Mr Jain asked: Is the Government trying to cast a tax burden on itself in its desperation to catch the black money peddler? Is it the Finance Minister's idea that even Union or State Government offices can be used as a conduit for black money operations?

In Chapter seven of the Bill, after introducing the tax proposal, under No 94, definitions are given for each of the contextual items as per the Income-tax Act, like Appellate Tribunal, Assessing Office and Prescribed. Under item No (5), a `person' (whoever enters into the cash transaction with the bank), is defined as one having the same meaning "as in Clause (31) of Section 2 of the Income-tax Act, 1961 and includes an office or establishment of the Central Government or the Government of a State."

In other words, the tax has to be paid by even State or Central Government offices when they withdraw more than Rs 10,000 from their banks on any single day. According to Mr Jain, the Government is trying to impose a new tax burden on itself, when its tax collections are reluctant to move northward.

As per the already existing Clause (31) in Section 2 of the I-T Act, a person includes, "an individual, a Hindu undivided family, a company, a firm, an association of persons or a body of individuals, whether incorporated or not, local authority and any artificial juridical person not falling within any of the preceding sub-clauses." The new definition has now been added to bring Government offices within the BCTT's ambit.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page


Stories in this Section
`Employment schemes can help check distress migration'


Remitting of attestation fees
Wind power body seeks restoration of turbine generators under TUFS
Dumping duty on poultry feed vitamin may go
Goa Budget proposes no fresh levies
Cabinet nod for SAARC pact on customs
India-Japan bilateral trade must be FDI-based, says Kamal Nath
Cabinet nod to ink PTA annexes with Latam trading bloc
FDA to put more baby products under scanner
J&J to state its position soon
ISRO, hospitals bet big on telemedicine
FedEx launches eye campaign with ORBIS
Metropolis Health Services to set up pathlabs overseas
Reliance refining margins rise as light, heavy crude prices diverge
Secretaries panel takes up oil, gas sector Regulatory Board Bill
Feather-derived plastic!
Maharashtra to borrow Rs 500 cr to boost power supply
Essar Power owes Rs 1,200 cr to Gujarat Electricity Board: Panel
`India lags in tapping hydropower potential'
KSEB moves to generate 342 mu additional power
Revised Rly demurrage rates may affect SAIL
Chidambaram promises `good news' on cash withdrawal tax
Cash withdrawal tax clause: Govt adding to its tax burden?
No such thing as free lunch
Chemists, druggists on strike for single-point levy of VAT
Textile exports may breach $70-b mark by 2014: Study
Textile exporters call for review of duty drawback scheme
CII plans cluster projects to help out SMEs
Truck, bus tyre production up year-on-year in Jan
PTC to offer coal intermediation services
Govt may jam hostile propaganda through media — Monitoring body to come under Home Ministry
TDSAT asks Govt to finalise FM radio norms by April 26
TKM College Alumni association
IT's good bet for realtors across cities
Sobha group plans to build mega mall in Bangalore
PHDCCI celebrates hundred years
FICCI calls for tighter discipline in farm support measures
Tirupur knitwear units bullish on April-Sept shipments
Legal training programme for women entrepreneurs
BSNL staff stage hunger strike in Thiruvananthapuram
Meet on translational research from tomorrow
SBT leadership camp
India Inc wants fringe benefit tax deferred
Proposals to amend Money Laundering Act approved
Doctor duo bags award


The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2005, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line