Adding up to a total of over Rs 11 lakh crore, the high number of cash withdrawals nudged the Centre to introduce measures to impose checks in such cases.
Withdrawals upwards of Rs 1 crore each from bank accounts of over 1.75 lakh entities in 2017-18 prompted the government to take steps for tracking and regulating cash transactions, reports The Times of India.
Adding up to a total of over Rs 11 lakh crore, the high number of cash withdrawals nudged the Centre to introduce measures to impose checks in such cases. The proposed two percent tax deduction at source (TDS) is one such step that featured in this year’s Budget which was tabled in Parliament on July 5.
Data on current accounts with annual transactions upwards of Rs 50 lakh is collected by the government while banks also report data for some savings accounts. Around 500 entities withdrew over Rs 100 crore from banks in 2017-18, while Rs 1-2 crore was withdrawn by over one lakh PAN holders, sources told the paper.
Several instances of what seemed like money being used for illicit purposes were brought to light by the 2017-18 data, even as some withdrawals were made for genuine business requirements, the report stated. PAN details in many cases were found to be incorrect and sometimes were not furnished at all.
The government announced that henceforth cash withdrawals of Rs 1 crore and above would attract two percent TDS, a move aimed at promoting digital payments, discouraging cash transactions and incentivising a switch to a cashless economy. This, it believes, will improve tracking of entities making large cash transactions as they will furnish genuine details in order to claim the advance tax paid.Finance Minister Nirmala Sitharaman, in her maiden Budget speech, said, "Business establishments with an annual turnover of Rs 50 crore would have to provide digital payment modes to customers at no extra charges, or merchant discounts, on either customers or merchants.” She suggested alternatives such as BHIM, UPI, NEFT and RTGS to promote a cashless economy.