ORDER

INCOME-TAX ACT

Finance Act, 2005 – Provisions relating to Banking Cash Transaction Tax

CIRCULAR NO. 6/2005, DATED 25-7-2005

The Finance Act, 2005 has, with effect from 1st June, 2005, introduced a new levy, namely, the Banking Cash Transaction Tax (BCTT) at the rate of 0.1 per cent on the following transactions,—

  (i)  withdrawal of cash from an account (other than a saving account) maintained with a scheduled bank on any single day exceeding Rs. 25,000 by an individual or HUF and Rs. 1,00,000 by other persons;

 (ii)  receipt of cash on encashment of term deposits with a scheduled bank on any single day exceeding Rs. 25,000 by an individual or HUF and Rs. 1,00,000 by other persons.

2. It has been brought to the notice of the Government that scheduled banks are also collecting BCTT on the transactions of withdrawals of cash made by other banks (both scheduled and non-scheduled, including co-operative banks) from their accounts maintained with the scheduled banks. Ordinarily, such withdrawals are purely for enabling the drawer banks to meet their normal banking requirements, and such transactions cannot be equated with cash transaction of regular account holders. As there is no intention to levy BCTT on bank-to-bank transactions, the Government has decided that transactions of withdrawal of cash from an account maintained by a scheduled bank or non-scheduled bank (including a co-operative bank) with a scheduled bank will not be liable to BCTT. Similarly, the transactions of receipt of cash from any scheduled bank on encashment of term deposits in the name of a scheduled bank or non-scheduled bank (including a co-operative bank) will also not be liable to BCTT. Accordingly, all the scheduled banks are advised not to collect BCTT on such bank-to-bank transactions.

3. For this purpose, a “non-scheduled bank” means a banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949, which is not a scheduled bank.

More Under Income Tax

Posted Under

Category : Income Tax (25041)
Type : Circulars (7478) Notifications/Circulars (30079)

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