Govt likely to introduce tax on Rs 10 lakh cash withdrawal a year

To discourage use of paper currency and promote digital payments, the government may introduce a tax on cash withdrawals of Rs 10 lakh in a year, as per the reports.

Govt likely to introduce tax on Rs 10 lakh cash withdrawal a year

In order to keep a track of individuals and tax returns in check, the government is also planning to consider mandating the Aadhaar authentication for all high-value cash withdrawals.

The government believes that annual cash withdrawals of more than Rs 10 lakh are not needed for most individuals and businesses, as mentioned in a report in English daily. While the final decision is yet to be made, the government is clear that it does not want to burden the middle and poor class with excessive compliance.

To promote digital transactions,  the Reserve Bank of India (RBI)  last week abolished its charges on  National Electronic Funds Transfer (NEFT)  and Real Time Gross Settlement System (RTGS) online money transfer.

The finance ministry believes that this will help in boosting non-cash transactions.

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