Latest banking awareness for sbi /ibps all upcoming exams.Banking Cash Transaction Tax is one of the taxes which is being proposed to be implemented by the government very soon now. There will be a tax on all the cash transaction above certain amount of withdrawal or deposit done by the individuals. This is one of the step which is meant to reduce the cash transaction and encourage the individuals to resort to the online/ cashless transaction using card or internet banking etc. There is several benefits of the scheme and there can be some drawbacks too so all the points are to be kept in mind before implementing any policy of the government. BCTT is not the new scheme and earlier also it was launched by the congress government in the year 2005 which was withdrawn in the year 2009.
Banking Cash transaction tax (BCTT)
One of the drawbacks of the scheme is that all the individuals generally those who are not technology savvy or those who are illiterate face problems on online transaction and they do not feel secure enough to use this method.
This will be interesting to know what government does and how much will it succeed in its attempt.
BCTT- Important pints to know
- It is a type of Direct Tax which was levied(from 2005 to 2009) on cash transactions exceeding a specific amount from the bank by a customer.
- Currently, Government is examining the recommendations of the high-powered Committee of Chief Minister on Digital Payments. According to which, Banking Cash Transaction Tax(BCTT) should be levied on cash deals of Rs. 50,000 and above.
- Earlier, it was first introduced in 2005 by the UPA-1 government under the Finance Act, 2005. But after four years it was rolled back on 1 April 2009. During this period it was 0.1%. Also, it was not applicable in the state of Jammu and Kashmir.
- Again, Tax Administration Committee headed by ParthasarathiShome had also recommended reinstating the BCTT in 2014.
This is a form of direct tax which the government through banks will charge on cash transaction of individuals above a certain amount. Bank account holders will have to use the cashless method for the transaction if they want to save the charge on it.
There are two type of taxes which government could levy. These are
- Direct tax
- Indirect tax
Direct tax, as in the case of BCTT is the tax which individuals have to pay directly and the amount is deducted while transaction/ payment.
In this type of tax, individuals cannot evade the tax. It is indirectly levied on the prices of the commodities and thus increases the prices. In order to buy the commodities, individuals have to pay the amount which contain a small portion of the tax as well. Indirect tax is the largest source of revenue for the government and currently various type of taxes have been increased by the government. BCTT is one of those taxes.