Cash transaction tax keeps the registers ringing in Tier-II cities

NEW DELHI: Cash is definitely dear and it is the flavour in emerging metros like Bhopal, Hyderabad and Pune.

The banking cash transaction tax (BCTT) collections in these Tier-II centres have witnessed high growth, in some cases as high as 300%. The trend could reinforce the case for continuing with the BCTT for a longer period than envisaged earlier. The finance minister had hinted in his last Budget about watching the trend in BCTT collections for some years before reviewing it.

Bhopal, responsible for collections in Madhya Pradesh saw the highest, 300%, growth at Rs 3.2 crore in April-September, ’06, compared to Rs 80 lakh in the corresponding period last year. Ahmedabad, saw a growth of 262.5% to Rs 2.9 crore in first half this fiscal, against Rs 80 lakh. Cyber city, Hyderabad, witnessed a rise of 240.7% to Rs 9.2 crore, compared to Rs 2.7 crore in April-September ’05.

BCTT collections in Kochi witnessed a rise of 174.2% to Rs 8.5 crore in H1 of the current fiscal as compared to Rs 3.1 crore in the previous corresponding period. Nagpur saw a growth of 150% in BCTT collections to Rs 50 lakh in April-September, ’06, as compared to Rs 20 lakh in same period last fiscal.

However, Jaipur and Chandigarh saw a decline. In Jaipur, collections declined by 66.7% to Rs 60 lakh in H1 of the current fiscal, compared to Rs 1.8 crore in corresponding in the same period last year. On the same lines, collections in Chandigarh declined by 38.5% to Rs 80 lakh as compared to Rs 1.3 crore in April-September, ’05.

Delhi beat Mumbai in BCTT collections though the actual quantum of collections in the country’s financial capital was much higher. While Delhi recorded a growth of 228% to Rs 27.6 crore, Mumbai saw a rise of 142.5% to Rs 113 crore in BCTT collections. BCTT collections in Bangalore rose by 182.7% to Rs 31.1 crore in April-September, ’06 against Rs 11 crore.

Chennai, recorded a growth of 171% to Rs 16.8 crore in H1 of this fiscal, against Rs 6.2 crore. Kolkata saw a rise of 157.5% in BCTT collections to Rs 10.3 crore in as compared to Rs 4 crore in April-September, ’05.

The BCTT introduced in the Finance Bill, ’05, came into effect from June 1, ’05. It applies to the whole of India except Jammu and Kashmir. The basic idea behind this move is to check tax evasion through huge cash withdrawals from bank accounts. The rate of BCTT is 0.1% on any cash withdrawal from the bank above Rs 25,000 on any single day.