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- The government is planning to introduce a tax on cash withdrawals of Rs 10 lakh in a year.The government is planning this move to discourage use of paper currency, promote digital payments as well as crack down on black money.
- Further,the government is also considering mandating Aadhaar authentication for all high-value cash withdrawals as the government believes that the move will make it easy to track individuals and keep tax returns in check.
- Recently,the Reserve Bank of India(RBI) had announced that it has decided to do away with the charges on NEFT and RTGS transfers.This move was taken to promote digital transactions.
- These decisions are in line with other rules mandated by the government to keep cash transactions in check.
- Earlier,the government had made digital or cheque payments mandatory for businesses to claim benefits of business expenses.Following this rule,large companies are now making wage payments of more than Rs 10,000 through cheque or via bank transfer.
- In 2016,high-level panel of chief ministers headed by then Andhra Pradesh CM had also recommended reintroduction of the tax on withdrawals of over Rs 50,000 among other measures to check cash use after demonetisation.However, the cash withdrawal tax was not implemented.
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