2019 – Posted in: Daily News – Tags: BCTT, cash transaction tax

BANKING CASH TRANSACTION TAX (BCTT)

For: Preliminary & Mains
Topic covers: BCTT – features & advantages

News Flash

The government will put tax on cash transactions at bank in place measures to further curb black money generation and not for revenue generation. Policymakers have started talks on the possibility of re-introducing the banking cash transaction tax (BCTT) to discourage cash transactions.

Further, the tax authorities are considering levying the estate tax on inherited property.

Significance

Through this, the tax authorities want the people to declare the income earned and pay taxes accordingly.
On the other hand BCTT is expected to help the department to detect bogus bills, accommodation entries, artificial loss claims,and dummy firms.

Background

The banking cash transaction tax is not a new idea, Finance Minister P Chidambaram in 2005 had first brought 0.1 per cent levy on “withdrawal of cash on a single day of over Rs 10,000 or more from banks.

Highlights

If the value of the property/asset is less than 5 crore, this tax would not be applicable.
The range of property may differ and even some property valued at 10 crore may be exempted.
The tax was there three decades ago but was abolished in 1985 by then finance minister V P Singh.
Meanwhile, the long-pending report on the direct tax code will take two more months and will be submitted by July 31.
The report will also incorporate new tax policies.
In its first five years (2014-19), the government had come up with policies such as Operation Clean Money,the Income Disclosure Scheme, and the Black Money Act.

Other likely moves

Changing the duration of the fiscal year.

Changing the duration of the fiscal year from April-March to January-December. However, it may face operational challenges and may be given time.
If it is introduced, this would end the 150-year-old British practice.
Similarly, the tax department is pitching for making the fiscal and assessment year the same under the I-T Act. The government had appointed a panel on changing the duration of the fiscal year.

Banking Cash Transaction Tax (BCTT)

This Chapter extends to the whole of India except the State of Jammu and Kashmir.
It shall come into force on the 1st day of June, 2005.

“Taxable banking transaction” means—

(a) A transaction, being withdrawal of cash (by whatever mode) on any single day from an account (other than a savings bank account) maintained with any scheduled bank, exceeding,—

(i ) [fifty] thousand rupees, in case such withdrawal is from the account maintained by any individual or Hindu undivided family;

(ii ) one lakh rupees, in case such withdrawal is from the account maintained by a person other than any individual or Hindu undivided family; or

(b) a transaction, being receipt of cash from any scheduled bank on any single day on encashment of one or more term deposits, whether on maturity or otherwise, from that bank, exceeding,—

(i ) [fifty] thousand rupees, in case such term deposit or deposits are in the name of any individual or Hindu undivided family;

(ii ) one lakh rupees, in case such term deposit or deposits are by any person other than any individual or Hindu undivided family;

Source: Business Standard

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