In the recently presented union budget, Finance Minister Nirmala Sitharaman announced that a TDS (tax deducted at source) of 2 per cent will be levied on cash withdrawal exceeding Rs 1 crore in a year from a bank account to discourage the practice of making business payments in cash.
The finance ministry officials justified the move saying that the two per cent tax, announced in last week’s budget and to start in September, was prompted by information showing misuse.
“We have seen that there are withdrawals amounting to a few lakh crores of rupees where people have withdrawn more than Rs 1 crore from one PAN card...The whole idea is that people should not withdraw more than Rs 1 crore from one bank account,” said Revenue Secretary A B Pandey.
About 2 lakh individuals/business entities withdrew amounts in excess of Rs 1 crore each from their bank accounts in FY18, aggregating Rs 11.31 lakh crore.
Just 448 entities withdrew over Rs 100 crore each taking the cumulative withdrawal to Rs 5.56 lakh crore in cash from bank accounts in one year, prompting the government to clamp down with a TDS on withdrawals of more than Rs 1 crore.
Over 1.03 lakh entities made cash withdrawals in the range of Rs 1-2 crore in 2017-18, totalling more than Rs 1.43 lakh crore.
While 58,160 entities have cumulatively withdrawn cash over Rs 1.75 lakh crore in the range of Rs 2-5 crore, as many as 14,552 have withdrawn a total of Rs 98,900 crore in the range of Rs 5-10 crore.
Besides, over 7,300 people have withdrawn Rs 1.57 lakh crore and the withdrawal value range from Rs 10-100 crore.
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