'No decision yet on taxing cash transactions above Rs 50,000'

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SME Times News Bureau | 10 Feb, 2017
The government has not taken any decision with regard to introducing a tax on bank transactions, though it has received a set of recommendations from the Committee of Chief Ministers, Economic Affairs Secretary Shaktikanta Das said on Thursday.

"The government is carefully examining the report. No decision has been taken so far... as and when a decision is taken, naturally the government will give it out," Das said at the 96th annual function here of the Associated Chambers of Commerce and Industry of India (Assocham).

The committee of Chief Ministers on digital payments, headed by Andhra Pradesh Chief Minister N. Chandrababu Naidu, had submitted an interim report to the government suggesting a banking cash transaction tax on deals amounting to Rs 50,000 and above in order to curb the use of cash.

The panel said the government must tax cash transactions above Rs 50,000, abolish banks' interest on credit card transactions, give tax refund to consumers on digital payments and extend Rs 1,000 subsidy on smartphones to income-tax non-payees to promote a less-cash digital economy.

The high-powered panel was asked to suggest measures to enable all sections of the population to migrate to digital payments, and recommend measures to leapfrog to the advanced digital payment systems of global standards.

It was constituted on November 30 last year after the government demonetised Rs 500 and Rs 1,000 notes.

Highlighting India's strong fiscal foundation, Das said: "Fiscal deficit has gradually been brought down, it is necessary to find the right balance between requirements of public expenditure and fiscal consolidation by targeting those sectors of economy where you need to spend more."

The government has certain fiscal constraints and it will be difficult for the government to reduce corporate tax rates to 25 per cent overnight because fiscal cost will be very high and government will not be able to do justice to various other sectors of the economy -- agriculture, rural infrastructure and other areas, he added.

Das said though the world scenario remains uncertain, the outlook for India's growth is very positive.

"We would expect the growth to be upwards of seven per cent on the back of various policy measures taken by the government both before and during the Budget and which the government will continue to take in the coming months," the Economic Affairs Secretary said.

"Our growth is premised on creating more job opportunities through increased infrastructure spending by carrying out reforms and new policy initiatives in sectors like -- textiles, leather, footwear and other similar sectors by taking tax reform measures, by continuing with the policy of reforms," he added.

With regard to taxation, he said the government is committed to ensuring that the administration is taxpayer-friendly.

"Emphasis of the government is on honouring the honest. The Revenue Department, CBEC (Central Board of Excise and Customs) and CBDT (Central Board of Direct Taxes) are taking steps to ensure that there is no misuse of power," he said.

"The annual performance reports of officers in the tax departments together with orders passed by officers of income tax are also being gone through by senior level officers," he added.

"While from the government side, we are taking steps, I think from the private sector and industry side we would encourage similar steps to be taken. The tax administration at the highest level, in the Ministry is working towards bringing about greater accountability and transparency," he added.

Highlighting the strong and robust reforms undertaken by the government, he said the reform agenda of the government will continue as spelt out by Finance Minister Arun Jaitley in the Budget.

On the issue of transfer of technology, Das said India has to use its low-cost manufacturing capabilities to ensure that there is domestic manufacturing.

"We have to spend more on research and developing own technological capabilities," he added.