Tax on cash deals of Rs 50,000: Government to 'carefully examine' CM panel recommendations

NEW DELHI: Government will "carefully examine" recommendations of the high-powered chief ministers' panel for levying a Banking Cash Transaction Tax ( BCTT) on cash deals of Rs 50,000 and above before taking a final view on it, the finance ministry said today.

Andhra Pradesh Chief Minister Chandrababu Naidu-headed committee of state chief ministers on digitisation submitted its interim report to Prime Minister Narendra Modi yesterday.

The panel, among other things, recommended a cap on cash in all types of big-ticket transactions and a levy on cash deals beyond Rs 50,000 as it sought to discourage the use of physical currency. It also suggested a host of incentives for payments by cards and other digital means.

In a statement, the ministry today said the recommendations will be carefully examined and appropriate decisions will be taken in due course.

"The media has reported various aspects of the recommendations made by the committee, including the recommendation relating to levy of the Banking Cash Transaction Tax on transactions of Rs 50,000 and above," the ministry said.

"It is informed that the government has not yet taken any final view on the recommendations of the committee. The recommendations will be carefully examined and appropriate decisions will be taken in due course."

The committee was set up post demonetisation in November to examine and recommend measures for implementation of digital payment solutions.

It has also suggested a Rs 1,000 subsidy for purchase of smartphones by non-tax assessees and small merchants and made a case of lower/zero merchant discount rate (MDR) for all digital payments to government entities.

The banking cash transaction tax was introduced in 2005 by the then UPA finance minister P Chidambaram. The levy was, however, withdrawn with effect from April 1, 2009.