Cash Tax

The Government of India is looking to introduce cash tax in order to boost the cashless economy in the country. Yes, if the proposal is cleared, it may figure in the February 1 Budget.

At present, the government is looking at the positives and negatives of the proposal, which could be a twisted form of the earlier banking cash transaction tax under the United Progressive Alliance Government under which tax will be imposed on cash withdrawals above a certain ceiling from bank accounts.

A senior Government official said, “Few are considering few decisions and a number of steps are under discussion.”

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The new Tax is being looked after so as to shrink the scope of cash economy and encourage digital transactions. The Government has taken a series of measures since demonetisation in November last year to incentivise digital transactions.

Another senior official from Government said, “The final call will be taken at the highest political level.”

“The idea is under attention and there is good chance it could be announced in the budget,” added another official.

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According to the Central Bank data, Digital Payments Transactions in December last year were 43% higher than in November last year and made 958 million. Government schemers on post demonetisation policies have been highlighting that saving on costs of currency operations is an economic plus, apart from the transparency benefits of digital transactions.