The Hindu Business Line : Cash transaction tax

The Budgetary exercise has at last recognised the importance of those who save money. With restoration of Section 80-C, which disappeared in the early 1990s, tax reduction on savings has come to the rescue of the salaried class and other tax payers. The scrapping of standard deduction is compensated by Section 80-C.

Increasing the savings limit to Rs 1 lakh is a boost. The Finance Minister, Mr P. Chidambaram, has brought cheer to the salaried class by introducing the 100 per cent tax exemption for savings in lieu of the 20 per cent rebate under Section 88, and rationalising the tax rates.

But the introduction of the banking cash transaction tax on withdrawals over Rs 10,000 a day is disappointing. What is the logic behind taxing somebody who withdraws his own savings? It is unfortunate that an experienced economist like Mr Chidambaram has introduced such a measure.

He should withdraw the proposal keeping in mind the good health of the banks and the inconvenience it causes depositors.

The Finance Minister, however, deserves full credit for bringing a well-balanced Budget.

C. P. Velayudhan Nair

Kochi

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