Kolkata, Feb. 28
TAX professionals, while welcoming the steps to rationalise tax treatment of savings in the Budget, are seeing red over the proposed Banking Cash Transaction Tax (BCTT) to check tax evasion, under which tax at the rate of 0.1 per cent of the value of each such taxable banking transaction (withdrawal exceeding Rs 10,000 in a single day) will have to be paid.
Some of them called this a ludicrous step, as unaccounted money generally does not flow into a bank, but instead may flow out of the bank where its end use should be tracked. They, however, described some of the other steps as quite bold, and "will lead to simplification of tax procedures".
Talking to Business Line today from his Mumbai office, Mr K. Shivram, President of All India Federation of Tax Practitioners, said far from acting as a step to check evasion, such a tax will affect only genuine assessees, and also may not stand up to legal scrutiny. Calling for a fresh look into BCTT, Mr N.M. Ranka, Tax Lawyer practising at Rajasthan High Court, said tax evasion can be tackled only through tighter vigil by the tax administration, and not by keeping tabs on cash withdrawals from banks, which may be for even emergency situations like hospitalisation etc.
Describing it as a retrograde step, Mr N.P. Jain, direct tax lawyer and Guest Faculty at West Bengal NUJS, said the tax will apply to many more transactions likepurchase of cash drafts, maturity of term deposits etc., and will apply to both individuals and companies. He said some jute companies make daily or weekly payments to workers, and their cash withdrawals from banks in a single day may well exceed Rs 10,000.
He said such soft measures would not address the main problem of black money. Under any case, many penal provisions already exist in I-T law, such as Section 68, Section 40 (A) or Sections 269SS and 269 T to curb such cash transactions.