Rs.9999 withdrawals
Finance Minister Palaniappan Chidambaram produced a 'dream' budget in 1997. A sort of budget that was so dear to the salaried middle class, that only a man like P.Chidambaram could produce. Irony was that he was a minister in a 'kitchdi' government, whose constituents couldn't think beyond caste & the current term in office. Despite his not-so-bright companions in the treasury benches, PC introduced quite a few novel schemes in that budget -
1) Introduction of 'competition postcards' at Rs.2 each to do away with the habit of mass mailing the TV channels for participation,
2) Introduction of a flat Income Tax of Rs.1500 for small traders & businesses there by bringing them into the tax bracket, at the same time making it affordable, and most importantly
3) A general amnesty scheme where one could declare the unaccounted money (the so-called black money) and pay a nominal tax.
While the first two were appreciated for their novelty, the third scheme drew lot of flak, but was very effective. Within the stipulated time, thousands of crores were declared and taxed. This not only paved way for the abolition of black money, but also yielded good revenue for the government at that time.
Years have rolled and PC is again in the Finance Minister's chair. As only a sensible person could do, PC has again produced a growth-oriented, well-balanced positive budget. The industry is happy (CII normally expresses happiness at all the budgets, more on that later), salaried class is happy about the IT reforms, even the opposition could only mumble for the sake of it. But, as is the nature of PC, he has introduced something fishy. Something very fishy and very ineffective, that it has every potential to take the shine off the budget. In his budget presentation for the next fiscal, he has come up with a weird proposal to impose a nominal tax of 0.01 percent on cash withdrawals of Rs.10,000 or above per day, to curb the scourge of black money.
What is going to happen is that, people are going to withdraw up to Rs.9999 to escape the tax. Another thing is that, people would open multiple bank accounts and where one cheque and one transaction would do normally, there are going to be multiple cheques and multiple transactions. Apart from that the IT filing procedure is going to be very messy. Black money has always remained outside the banking realms and it is generally untraceable. That is why, it is called black money. Has PC run out of ideas to unearth black money that he is going to focus on millions of bank transactions that take place everyday?
Not a wise idea Mr. Chidambaram. Please, roll it back. One another amnesty chance would be a sensible thing to do.
1) Introduction of 'competition postcards' at Rs.2 each to do away with the habit of mass mailing the TV channels for participation,
2) Introduction of a flat Income Tax of Rs.1500 for small traders & businesses there by bringing them into the tax bracket, at the same time making it affordable, and most importantly
3) A general amnesty scheme where one could declare the unaccounted money (the so-called black money) and pay a nominal tax.
While the first two were appreciated for their novelty, the third scheme drew lot of flak, but was very effective. Within the stipulated time, thousands of crores were declared and taxed. This not only paved way for the abolition of black money, but also yielded good revenue for the government at that time.
Years have rolled and PC is again in the Finance Minister's chair. As only a sensible person could do, PC has again produced a growth-oriented, well-balanced positive budget. The industry is happy (CII normally expresses happiness at all the budgets, more on that later), salaried class is happy about the IT reforms, even the opposition could only mumble for the sake of it. But, as is the nature of PC, he has introduced something fishy. Something very fishy and very ineffective, that it has every potential to take the shine off the budget. In his budget presentation for the next fiscal, he has come up with a weird proposal to impose a nominal tax of 0.01 percent on cash withdrawals of Rs.10,000 or above per day, to curb the scourge of black money.
What is going to happen is that, people are going to withdraw up to Rs.9999 to escape the tax. Another thing is that, people would open multiple bank accounts and where one cheque and one transaction would do normally, there are going to be multiple cheques and multiple transactions. Apart from that the IT filing procedure is going to be very messy. Black money has always remained outside the banking realms and it is generally untraceable. That is why, it is called black money. Has PC run out of ideas to unearth black money that he is going to focus on millions of bank transactions that take place everyday?
Not a wise idea Mr. Chidambaram. Please, roll it back. One another amnesty chance would be a sensible thing to do.
posted by Indian Voter at 1:40:00 AM
7 Comments:
You are right. PC does have this uncanny ability to bring out the best of budgets and also do a lot of stunts.
Why Rs.9999/-,this tax applies only to scheduled bank and you can escape by opening your savings account with a private bank.
I have a different angle of budgeting in my new post. visit when you are free.
Jagan: PC is preparing to take it back partially. He is prepared to rise the limit to 50k. But, still I say that this is ridiculous. Why should I be taxed for spending my money, which I get after being taxed?
On the Railway budget, I was about to post one, but events that followed by - budget, elections etc have made it a not-so interesting topic. Will certainly post that after some modifications. Thanks.
Hari:: Thanks for pointing out abt the tax not applicable to accounts maintained in private banks.. This is going to further erode the customer base in the nationalised banks. A very bad move.
Will read your post followed by. Thanks for visiting.
What you say is absolutely true. Why do we have to pay for spending our money for which the tax has been already paid. I'm sure it would be removed soon.
>>>Why should I be taxed for spending my money, which I get after being taxed?
Good question :-) I completely agree with u.
this blog is very very nice...hmmm....indian politics...gonna be very interesting :) keep up the gud work...:)
Rs.10000 and u pay Rs.10 for withdrawal, it is like double taxation. There should be some better way to unearth the black money.
Good move to unearth black money is VDIs which was a success when it was introduced. But if the TAX percent is less, we can unerath more tax.
This is just my view. I found this blog interesting. Keep it up. I too like politics but don't know to do politics.
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