Moneycontrol
Jan 13, 2017 01:10 PM IST | Source: Moneycontrol.com

Budget 2017: 'Cash tax' in works to discourage large withdrawals

The step to encourage digital transactions could be a modification of the United Progressive Alliance government‘s banking cash transaction tax, where tax will be imposed on cash withdrawals above a certain limit.


Moneycontrol Bureau

The government is mulling a “cash tax”, the likely proposal of which may figure in the 2017-18 Budget, as part of efforts to incentivise digital transactions, according to a report in The Economic Times.


The report added that the government is currently evaluating the proposal. The step to encourage digital transactions could be a modification of the United Progressive Alliance government’s banking cash transaction tax, where tax will be imposed on cash withdrawals above a certain limit.

An official was quoted as saying that the final call will be taken at the “highest political level”, while another said there was good chance the measure could be introduced in the February 1 Budget.

According to Reserve Bank of India data, digital payments transactions in December last year were 43 percent higher in December than in November since the government devalued popular bank notes.

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