In a bid to promote cashless payments, Government of India may implement a tax on cash transactions. Now you may have to pay tax for cash transactions.
Ever since the announcement of demonetisation, Govt. is trying to push cashless economy and has made many plans to implement the same. Among these a ‘cash tax’ is one of the method that is being considered by the Govt. This may be seen in the budget on 1st February.
The proposal, not yet confirmed is being considered and can be form of banking cash transaction tax under the UPA government. Under this rule will be levied on cash withdrawals above a certain amount from the bank accounts.
Economic times, quoted some official saying, “A number of steps are under discussion.” The main aim of this tax is to reduce cash transactions and promote digital payments.
Tax on Cash: Another way to promote digital transactions?
Ever since the demonetisation of higher currency notes in November, Government is trying to figure out various ways to implement a cashless society. Some of these steps include the launching of BHIM UPI app, introduction of NUUP and promotion of Aadhaar Enabled Payment System (AEPS).
As per Central Bank Data, December 2016 witnessed 958 million cashless transactions which was 43% higher than in November.
Cost of Cash v/s Cost of Cashless methods
Cashless transactions in some forms cost money like the annual credit card fees, transaction fee, the cost of various devices like micro ATMs but it is being said that the the macro cost of producing large amounts of cash is even greater.
According to ET, “A January 2015 study – ‘Cost of Cash in India’ – commissioned by MasterCard and brought out by the Institute For Business In The Global Context estimated India’s central bank and commercial banks bear an annual currency operations cost of Rs 21,000 crore. Government strategists on post demonetisation policies have been emphasising that saving on costs of currency operations is an economic plus, apart from the transparency benefits of digital transactions.”
With inputs from Economic Times
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