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Journalism of Courage
The finance minister’s proposal to levy a tax of 0.10 per cent on withdrawal of Rs 10,000 and above has kicked up a storm.
While top bank officials have refrained from criticising the FM move, bank employees down the ladder, individuals, and corporates have come down heavily on the proposal.
“It is additional workload for us as a bank employee. On the other hand, it’s unfair to pay tax on the money for which I’ve already paid tax twice or thrice,” said an employee of State Bank of India.
But his chairman thinks otherwise.
“The step to impose a small amount tax for withdrawing of Rs 10,000 cash will have a positive impact in tackling black money. It will also make customers keep higher amount of deposits in his/her account,” says AK Purwar, Chairman, SBI.
What has made the banks nervous is the penalty clause. As per the Finance Bill which is before Parliament, if anybody violates the provision and fails to pay the tax, the amount withdrawn will be the penalty.
This means if a person withdraws Rs 2 lakh and fails to pay Rs 200 as tax, the IT department can impose a penalty of Rs 2 lakh. Agrees the CMD of a PSU bank, “Though the intention of the FM is in the right spirit — to tackle black money — the move might not serve the actual purpose. The move might prove to be counter-productive. However, we do not mind the additional work,’’ the CMD said.
According to a senior bank official, the new tax is likely to be a TDS (tax deducted at source). “You’re already paying TDS on the amount in the fixed deposit. Now the new tax also will come in. For a salaried person, this will be the third tax — one at the company level, second while putting the money in the FD and the third will be withdrawal tax,” he said.
The finance minister seems to be in favour of less cash transactions. However, in the case of small business units, cash transactions are integral part of the daily business and cannot be avoided, a senior official in PNB added.
The saving community criticised the move and demanded a rollback. “The withdrawal tax is illegal and highly deplorable. People with black money will not keep their money in the bank. Most of the middle income people pay tax at source and deposit the balance money for emergency needs,” said KA Viswanathan, who retired from a public sector company. Finally, the branch manager of a private sector bank says, ‘‘The proposed tax is totally irrational and would cause unjustified hardship and inconvenience to the people. The government should have identified some other innovative plan to stop black money.”
