Banking cash transaction tax abolished

Taxpayers will not have to pay the levy on withdrawal of cash from banks with the government withdrawing the Banking Cash Transaction Tax (BCTT) from on Wednesday.

The government had introduced 0.1 per cent BCCT in 2005 on cash withdrawals of more than Rs 50,000 (individuals) and Rs 1 lakh for others in a single day from non-savings bank account maintained with any scheduled bank. The tax has been withdrawn from April 1 following an announcement made by the then Finance Minister P Chidambaram in his Budget speech for 2008-09, sources said.

In his speech, Chidamabram had said, “The BCTT has served a very useful purpose in enlarging the information system of the Income Tax Department. Since the information is also being gathered through other instruments introduced in the last few years, I propose to withdraw this tax with effect from April 1, 2009.”

The levy was introduced in 2005 to track unaccounted money and trace its source and destination.