Financial Daily from THE HINDU group of publications
Thursday, Jun 09, 2005
Industry & Economy - Taxation
Cash transaction tax Withdrawals from different bank branches not to be clubbed
New Delhi , June 8
THE Finance Ministry has made it clear that cash withdrawal from different branches of a bank on a single day would not be aggregated (clubbed) for the purpose of levy of banking cash transaction tax (BCTT).
Similarly, cash receipts on encashment of term deposits with different branches of a bank on a single day would also not be aggregated for the purpose of levy of BCTT.
Further, the Finance Ministry has said that transactions of cash withdrawal and cash receipts on encashment of term deposits on a single day would not be clubbed for the purpose of this levy.
The Revenue Department has made these clarifications through the explanatory notes on the provisions relating to BCTT. The Finance Act, 2005 had introduced the BCTT with an objective of preventing the generation and laundering of black money through banking channels. The BCTT came into effect from June 1.
The Finance Act, 2005, had specified that any cash withdrawal by an individual or a HUF in excess of Rs 25,000 on a single day from the same account (other than a savings bank account) would attract BCTT at the rate of 0.1 per cent. For any other person (including State and Central Governments), cash withdrawal in excess of Rs 1 lakh on a single day from the same account (other than a savings bank account) would attract the BCTT levy.
The Finance Ministry has now clarified that an individual would not be liable to BCTT if he maintained two or more accounts in a bank and withdrew up to Rs 25,000 from each account in a single day.
However, multiple withdrawals of cash from the same account or multiple receipts of cash on encashment of a term deposit or deposits in the name of the same person on any single day would be treated as a single taxable banking transaction. If an individual were to withdraw Rs 1 lakh on a single day in multiples of Rs 20,000 from one account, he would be liable to BCTT on the aggregate cash withdrawal of Rs 1 lakh.
While cash withdrawals using a credit card would not be subjected to BCTT, the Revenue Department has said that cash withdrawals using a debit card from any account other than a savings account would be liable to BCTT.
The tax base for the BCTT is the value of taxable banking transaction, which comprises two categories of transactions cash withdrawal and receipts of cash on encashment of term deposits.
The Finance Minister, Mr P. Chidambaram, had already announced that cash withdrawals from savings bank accounts would not be subjected to this levy.
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