The government is considering re-introducing the banking cash transaction tax to clamp down on black money, Business Standard reports. While the tax will add to the government’s revenues, the larger aim is to track big cash transactions in the system.
The proposal has been discussed at pre-Budget consultation meetings, the report stated. “We have received suggestions on taxing cash transactions. The departments concerned are examining the feasibility and effectiveness of the tax,” the article quoted a government official as saying.
Tax authorities are also considering imposing an estate tax on inherited property, which was abolished in 1985. Authorities might exempt properties whose value is less than Rs 5 crore from the tax purview, the report added.
Moneycontrol could not independently verify the story.
The measures will proceed once the newly elected National Democratic Alliance (NDA) government appoints a Finance Minister.
In 2005, the then Finance Minister P Chidambaram had introduced a BCTT of 0.1 percent on cash withdrawals above Rs 10,000, a cap which was later raised to Rs 25,000. The tax was eventually scrapped in 2009.
The tax was imposed on individuals and Hindu Undivided Families (HUFs). From other accounts, cash transactions of over Rs 1 lakh were taxed.
Revenue from collection of BCTT was insignificant when compared with Income Tax. The government had collected only Rs 600 crore as BCTT in 2008-09, according to a Business Today reports.
At pre-Budget consultations, there were also talks of changing the fiscal year to January-December from April-March, Business Standard reports. The Income Tax Department has recommended making the fiscal year and assessment year for income tax of the same duration, the report added.