Union Finance Minister Nirmala Sitharaman proposed on Friday, July 5, tax deduction at source (TDS) of two per cent on cash withdrawals exceeding Rs 1 crore in a year from a bank account.
"Our Government has taken a number of initiatives in the recent past for the promotion of digital payments and less cash economy," said Sitharaman, while presenting her first Union Budget. The decision was made to promote digital payments and curb black money.
The Finance Minister also proposed that business establishments with an annual turnover of more than Rs 50 crore shall offer low-cost digital modes of payment to their customers and no charges or Merchant Discount Rate (MDR) shall be imposed on customers as well as merchants.
"RBI and banks will absorb these costs from the savings that will accrue to them on account of handling less cash as people move to these digital modes of payment," Sitharaman said.
"Necessary amendments are being made in the Income Tax Act and the Payments and Settlement Systems Act, 2007 to give effect to these provisions," she added.
