Banking Cash Transaction Tax- Board issues explanatory notes
The CBDT has issued explanatory notes on the BCTT effective from 1.6.2005.
• A cash withdrawal would fall within the scope of a taxable banking transaction if it satisfies the following conditions:
(i) The cash withdrawal (by whatever mode) is from an account other than a savings bank account.
(ii) The account is maintained with any scheduled bank.
(iii) The amount of cash withdrawn on a single day from the same account should exceed Rs. 25,000 in the case of an individual or a HUF or Rs. 1,00,000 in the case of any ther person.
• A receipt of cash on encashment of term deposits would also be within the scope of a taxable banking transaction.
• The value of the taxable banking transaction shall be the amount of cash withdrawal on any single day.
• Multiple withdrawals of cash from the same account on any single day shall be treated as a single taxable banking transaction. Withdrawal from different accounts and different branches by an individual will not be clubbed.
• Once the threshold is crossed, the tax is payable on the whole amount withdrawn, not in excess of the exempted amount. That is if Rs. 30,000/- is withdrawn, tax has to be paid on Rs. 30,000/- and not on Rs. 5000/-
• Withdrawal by Credit cards not liable for tax, but by debit card will be subject to tax.
• Even Government offices are liable to pay this tax. The objective of the banking cash transactions tax was declared to be to prevent generation and laundering of black money through the banking channels. Does the Government now believe that Government offices are also into black money generation and laundering?
• The Tax will be attracted even if the withdrawal is made outside India, but debit is made in India. Conversely if the withdrawal is in India but the account is abroad, no tax is payable.
• Tax will be collected by the bank at the time of transaction
• There are provisions for assessment and appeals
• If the bank pays excess tax, it will be refunded, but the Bank is required to refund it to the person from whom it was collected. What happens if the fellow has closed his account?
• BCTT paid is deductible in computing the income from profession or business.
CBDT CIRCULAR NO. 3/2005 dated 3.6.2005