Banking Cash Transaction Tax (Chapter Vii of Finance Act, 2005)

Introduction

Banking cash transaction was a direct tax applied on money withdrawal in specific scenarios. An axis bank cash deposit machine near me or an ATM can be easily used to deposit or withdraw money. When the amount of cash withdrawn is above the specified limit by the bank, BCTT comes into action. The Banking Cash Transaction Tax started to be applied in 2005. However, due to specific disparities, it was abandoned in 2009. There have been discussions on restoring the Banking Cash Transaction Tax. 

Banking Cash Transaction Tax Meaning 

Banking cash transaction tax means the tax applied on the specified transactions. A bank cash transaction is one when there is an outflow of cash. Banking cash transaction tax means the rules that lead to the tax, as mentioned earlier applicability. Under the Finance Act of 2005, provisions for BCTT were laid down. The tax was imposed from 1st June 2005. If you are withdrawing money above the limit that the bank has specified, you are liable to pay tax to the government. Deposition and withdrawal of cash from an ATM have become readily available in cities. 

Banking Cash Transaction Tax Act 2005

The Banking Cash Transaction Tax Act 2005 is section 111 of the Finance Act (2005 ) Chapter VII of the Finance Act 2005 deals with banking cash transaction tax act rules. The Reserve Bank of India sanctioned the rules and allowed the same enforcement. According to the then Finance Minister, the information gathered through BCCT was also collected through other instruments. Hence, the banking cash transaction tax act was withdrawn. The amount of tax was 0.1 % on withdrawal of Rs. 50000 in the case of individuals in a single day. And for others, the tax was applicable on a withdrawal of Rs 100000 in a single day. The account should be a non-saving one under and scheduled bank. 

Purpose of BCTT

The BCTT was not welcomed by a lot of taxpayers and received backlash. The then Finance Minister, in his speech, mentioned how BCTT turned out to be a boon in recording significant financial transactions. Traders who have been avoiding sales and income tax fell under the radar of BCTT. There were exceptions, too. For example, money was withdrawn using a credit card, and it would not come under the BCTT. But transactions using a debit card ( non-savings account ) will be liable to pay the tax. It is not necessarily essential to visit a bank for deposit and withdrawal. Deposit money and withdraw using a nearby ATM.

Rules Of Banking Cash Transaction Tax Act

The provisions of Chapter VII demanded the execution based on specific rules. These rules may be called the BCTT rules.

• Every scheduled bank branch must maintain details of taxable transactions entered into the branch

• The tax amount collected by the scheduled branches must pay the amount of tax to the credit of the Central Government by transferring it to any component of Reserve Bank of India or State Bank of India, or any authorised bank with the BCTT tax challan

• A statement concerning the taxable banking transactions and the tax that the branches have collected during a period of one month must be provided

• If an assessee fails to pay the returns, the officer can send a notice to file the return within thirty days of the issued information

Conclusion

After abandoning the BCTT in 2009, there have been instances that indicated the comeback of the same. The authentication of high amount transactions to curb black money raises questions. However, before that, the government’s job would be to ensure that honest taxpayers are not affected by the same. The limitations must be set legally, keeping in mind the direct and indirect taxes already levied on the citizens. It is yet to see whether BCTT makes a comeback or not?