Finance Budget to skip bank tax

New Delhi: Despite a high-profile committee on cashless transactions headed by Andhra Pradesh Chief Minister N. Chandrababu Naidu suggesting ‘harsh measures’ including imposition of a banking transaction tax on cash transactions above Rs 50,000, the Central government on Wednesday said that it has not taken any final view on these recommendations.

This may indicate that the government is unlikely to include the controversial recommendation in the Union Budget on February 1.

The government is mindful of any negative reaction from the people after demonetisation in view of the crucial state Assembly elections.

“The media has reported various aspects of the recommendations made by the committee, including a recommendation relating to the levy of banking cash transaction tax on transactions of Rs 50,000 and above.  It is informed that the government has not yet taken any final view on the recommendations of the committee,” said the finance ministry.

It said that the recommendations will be “carefully examined and appropriate decisions will be taken in due course.”

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 The levy was, however, withdrawn with effect from April 1, 2009.

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

The panel, among other things, recommended a cap on cash payment 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.

The committee has also suggested a host of incentives to encourage  payments by cards and other digital means. The committee was set up after the Central government decided to demonetise 500 and 1,000 notes in November to examine and recommend measures for implementation of digital payment solutions.

In its report, the panel suggested that tax incentives should be extended to micro ATMs and biometric sensors and their domestic production should be encouraged.