EXPLANATORY NOTES TO THE PROVISIONS OF THE FINANCE ACT, 2008

CIRCULAR NO. 1/ 2009, DATED 27th MAR, 2009

46. Discontinuation of Banking Cash Transaction Tax

46.1 The Banking Cash Transaction Tax (BCTT) was introduced by the Finance Act, 2005. It provides for a levy at the rate of 0.1 per cent (10 basis points) on the taxable banking transaction. The ‘taxable banking transaction’ has been defined to mean a transaction being,-

(i) withdrawal of cash (by whatever mode) exceeding specified limit on any single day from an account (other than a saving bank account) maintained with any scheduled bank; or (ii) receipt of cash exceeding a specified limit from any scheduled bank on any single day on encashment of one or more term deposits, whether on maturity or otherwise.

46.2 The specified limit is Rs. 50,000/- in the case of an individual and HUF and Rs. 1,00,000/- for other person.

46.3 A sunset clause has now been introduced by inserting a new sub-section (3) in section 95 of the Finance Act, 2005. The proposed new sub-section provides that no BCTT shall be charged in respect of any taxable banking transaction after the 31st day of March, 2009.

46.4 Applicability: This amendment has been made applicable with effect from 1st April, 2009.

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