BANKING CASH TRANSACTION TAX (BCCT)

YES…..BCCT is back, but differently. 

To avoid large amount of cash transactions being made, the Naidu committee has recommended levy of transaction tax on all cash transactions above Rs. 50,000.  In November last year the Government had appointed a committee headed by the Andhra Pradesh Chief Minister Chandrababu Naidu, which has given its recommendations as detailed below:

1. To curb use of cash, tax be levied on all cash transactions above      Rs. 50,000.
2. Even for big cash transactions a ceiling limit be brought in.
3. Non income tax assesses or lower income group people may be encouraged with a subsidy of Rs. 1000 purchase of smart phones.
4. Even for merchants doing digital transactions, relief be provided by way of not levying tax on retrospective transactions and also by providing various tax reliefs on ensuing transactions.
5. People up to a particular income level be allowed some tax relief for transactions carried out digitally.
6. Allow 50% subsidy on Aadhar based payments, made at merchant points.
7. Merchant Discount Rates be withdrawn on transactions done through Aadhar based payments.
8. Digital payments to Government entities be permitted with a Zero MDR.
9. Government functions like Public Distribution System should compulsorily be brought under digital payments system.
10. Amendment to Money Laundering law should be made to make Aadhar a compulsory document for KYC compliance.

The committee also felt that bringing down the cost would alone bring a rise in the digital transactions.  These recommendations are likely to be brought up during the ensuing budget session of Parliament.