Bad news: You will be taxed if you withdraw Rs 50,000



New Delhi: The Naidu-led panel has recommended levy of cash transaction tax for cash transactions of Rs 50,000 and above. A panel of chief ministers has recommended a ban on transactions beyond a threshold and a tax on payments beyond Rs 50,000 as it sought to minimise the usage of physical currency. 


The Chief Ministers' Panel report, which was submitted to Prime Minister Narendra Modi by committee representative Chief
Minister of Andhra Pradesh N Chandrababu Naidu, has also made a case of lower/zero merchant discount rate (MDR) for all
digital payments to government entities and cap on cash in all type of big ticket transactions.


The 'Merchant Discount Rate' is charged to a merchant by a bank for providing debit and credit card services. The committee comprising Maharashtra Chief Minister Devendra Fadnavis and Madhya Pradesh Chief Minister Shivraj Singh Chouhan has also asked the Centre to promote Aadhaar Enabled Payment System (AEPS) by incentivising and not charging MDR.


The other recommendations include tax incentives for micro ATMs, biometric sensors etc. and tax refund for consumers using digital payment up to a certain proportion of annual income.


When asked how sure he was about incorporation of these recommendations in the forthcoming budget on February 1, Naidu said, "I am very confident about that."


Explaining about advantage of digital payments, he said that there are lots of cost of handling physical currency because of its printing, movement and security while there is no such cost for digital currency. 

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