Banking cash transaction tax

A new indirect tax system known as the Goods and Services Tax (or "GST") was introduced on July 1st, 2017, and it incorporated a number of national and state-level indirect taxes including as value added taxes, sales taxes, excise charges, entertainment taxes, Octroi taxes, and others. This degree of integration in the federal structure of government taxes has established a standard for a further stage of integration in which indirect and direct taxes may also get the same treatment. The government has previously conceived of this notion and put it on paper in the shape of the Banking Transaction Tax (or "BTT").

In reality, despite what most of us may not be aware of, India tested the viability of BTT from July 1, 2005, through March 31, 2009, albeit in a very limited capacity, by enacting a Banking Cash Transaction Tax during that time. Not to add that it had disadvantages even though the outcomes were encouraging enough to expand the reach of that tax. The revenue authorities have, nevertheless, never forgotten the BTT concept.

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The following developments might be the beginning of a trend:-

(1) In November 2016, high-value currency notes were demonetized overnight.

(2) The introduction of GST, followed by the creation of e-way bills and now e-invoicing.

(3) Lowering the cash restrictions through changes to income tax for making loan installments and paying costs.

(4) The implementation of TDS on bank cash withdrawals, which are not considered to be anyone's income or cost.

(5) All sorts of people must record certain cash-related transactions through tax audit reports or yearly information reports.

(6) Mandatory PAN and Aadhaar linking for all bank accounts.

(7) The Jan Dhan Yojna, a particular programme for opening bank accounts.

(8) The Unified Payment Interface was launched as a means of fast payment.

(9) Regulating cooperative banks using a variety of strategies.

Whether it happens suddenly or gradually, the deployment of BTT may eventually become necessary as we move into this era. The aforementioned pattern demonstrates an intention to promote digital and electronic transactions with regard to payments and receipts through financial inclusion policies, incentives, and legal amendments while discouraging cash transactions through the imposition of additional compliances, the assessment of higher transaction fees, and the implementation of penalties for high transactions.

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