BANKING CASH TRANSACTION TAX RULES, 2005
Notification No. 156/2005 [F.
No. 142/09/2005-TPL], dated
30-5-2005
In exercise of the powers conferred by sub-section (1) read with
sub-section (2) of section 111 of the Finance Act, 2005 (18 of 2005), the
Central Government hereby makes the following rules for carrying out the
provisions of Chapter VII of the said Act relating to banking cash transaction
tax, namely:—
1. Short title and commencement:-
(1) These rules may be called the Banking Cash
Transaction Tax Rules, 2005.
(2) They shall come into force on the 1st day of
June, 2005.
2. Definitions:-
(1) In these rules, unless the context otherwise
requires,
(a) "Act" means the Finance Act, 2005
(18 of 2005);
(b) "authorized bank" means any bank as
may be appointed by the Reserve Bank of India as its agent under the provisions
of sub-section (1) of section 45 of the Reserve Bank of India Act, 1934 (2 of
1934);
(c) "Form" means a Form set out in the
Appendix to these rules.
(2) Words and expressions used and not defined in
these rules but defined in the Act, the Negotiable Instruments Act, 1881, the
Reserve Bank of India Act, 1934, the Banking Regulation Act, 1949, the
Income-tax Act, 1961, or the rules or regulations made there under shall have
the meanings respectively assigned to them in those Acts or the rules or the
regulations.
3.
Maintenance of particulars of taxable banking transactions by the scheduled
bank:-
(1) Every branch of a scheduled bank shall keep
and maintain in Form No. 1 the particulars of taxable banking transactions
entered into in that branch.
(2) Every branch
of a scheduled bank which is maintaining its daily account on a computer media,
shall keep and maintain the particulars as referred to in sub-rule (1) on a
computer media
4.
Payment of banking cash transaction tax:-
Every scheduled bank which is required to collect and pay banking cash
transaction tax under section 97 of the Act, shall, in respect of all its
branches, pay the amount of such tax to the credit of the Central Government by
remitting it into any branch of the Reserve Bank of India or of the State Bank
of India or of any authorized bank accompanied by a banking cash transaction
tax challan.
Every scheduled bank shall furnish a statement of taxable banking
transactions in respect of which it is required to collect tax during a month,
in Form No. 2 to the income-tax authority specified in this behalf by the Board
on or before the expiry of the month immediately following the said month on a
computer media, in accordance with the following:—
(a) The computer media conforms to the
following specifications:
(i)
CD ROM of 650 MB capacity or
higher capacity; or
(ii) 4mm 2GB (90M/120M) DAT Cartridge; or
(iii) Digital Video Disc;
(b) if the data relating to the schedules is
copied using data compression or backup software utility, the corresponding
software utility or procedure for its decompression or restoration shall also
be furnished;
(c) The statement shall be accompanied by a
certificate regarding clean and virus free data.
6. Return of taxable banking cash transactions:-
(1) The return of taxable banking transactions
required to be furnished under sub-section (1) of section 98 of the Act shall
be in Form No. 3 and be verified in the manner indicated therein.
(2) The particulars required to be furnished in
the Schedules A and B toForNo.3 referred to in sub-rule (1) shall be furnished
on a computer media, in accordance with the following,—
(a) The
computer media conforms to the following specifications:
(i) CD ROM
of 650 MB capacity or higher capacity; or
(ii) 4mm
2GB/4GB (90M/120M) DAT Cartridge;
(iii) Digital
Video Disc'
(b) if the data relating to the schedules is
copied using data compression or backup software utility, the corresponding
software utility or procedure for its decompression or restoration shall also be furnished;
(c) The return shall be accompanied by a
certificate regarding clean and virus free data.
(3) The return of
taxable banking transactions entered into during a financial year shall be
furnished on or before the 31st July immediately following that financial year.
7.
Return by whom to be signed:-
The return under sub-section (1) of section 98 of the Act shall be signed
and verified:
(a) In the
case of a scheduled bank, being a company, by the managing director or a
director thereof;
(b) In the
case of a scheduled bank, not being a company, by the principal officer
thereof.
8.
Time limit to be specified in the notice calling for return of taxable banking
stransaction:-
Where an assesses fails to furnish the return under
sub-section (1) of section 98 of the Act within the time specified in sub-rule
(3) of rule 6, the Assessing Officer may issue a notice to such person
requiring him to furnish, within thirty days from the date of service of the
notice, a return in the Form prescribed in rule 6 and verified in the manner
indicated therein.
Where any tax, interest or penalty is payable in consequence of any order
passed under the provisions of Chapter VII of the Act, the Assessing Officer
shall serve upon the assesses a notice of demand in Form No. 4 specifying the
sum so payable.
10.
Prescribed time for refund of tax to the person from whom such amount was
collected:-
Every assesses, in case any amount is refunded to it on assessment under
sub-section (2) of section 99 of the Act, shall, within thirty days from the
date of receipt of such amount, refund the same to the concerned persons from
whom it was collected.
11.
Form of appeal to Commissioner of Income-tax (Appeals):-
(1) An appeal under sub-section (1) of section
107 to the Commissioner (Appeals) shall be made in Form No. 5.
(2) The form of appeal prescribed by sub-rule
(1), the grounds of appeal and the form of verification appended thereto
relating to an assesses shall be signed and verified by the person who is
authorized to sign the return of taxable banking transactions under rule 7.
12. Form of appeal to Appellate Tribunal:-
An appeal under sub-section (1) or sub-section (2) of section 108 of the
Act to the Appellate Tribunal shall be made in Form No. 6, and where the appeal
is made by the assessee, the form of appeal, the grounds of appeal and the form
of verification appended thereto shall be signed by the person specified in
rule 7.
The Finance Act, 2005 — Explanatory Notes on
the provisions relating to banking cash transaction tax
Circular No.
3/2005 [F. No.
142/14/2005-TPL], dated 3-6-2005
The Finance Act, 2005 (hereafter referred to as Act) has introduced a new
levy, namely, the banking cash transaction tax (hereafter referred to as BCTT)
on certain banking transactions. The provisions relating to levy of this tax
are contained in Chapter VII (sections 93 to 112) of the Act. Section 111 of
the Act empowers the Central Government to make the rules for carrying out the
provisions of this Chapter. The rules have since been formulated and notified vide
SO 737(E), dated 30th May, 2005. The salient features of this levy are
explained in the following sections.
2.1 The Finance
Minister, in para 177 of his speech while presenting the Budget 2005-2006,
stated as under:-
"The NCMP requires the Government to introduce special schemes to
unearth black money and assets. I am obliged to carry out the mandate, but
without giving undeserved relief or an amnesty. I am concerned about large cash
transactions, especially withdrawals of cash, when there is no ostensible
purpose to withdraw such large amounts of cash. These cash withdrawals leave no
trail, and presumably become part of the black economy. Therefore, I propose to
introduce two anti tax evasion measures: Firstly, I propose to levy a tax on
withdrawal of cash on a single day of over Rs. 10,000 or more from banks at the
rate of 0.1 per cent. Thus, a person withdrawing Rs. 10,000 in cash would have
to pay a small sum of Rs. 10."
2.2 The Finance
Minister while replying to the debate on the Finance Bill, 2005 in both Houses
of Parliament, reiterated this objective. Undoubtedly, therefore, the objective
of the banking cash transactions tax is to prevent generation and laundering of
black money through the banking channels.
3. Tax Base (What is liable to tax?):-
3.1 The tax base
for the purposes of BCTT is the value of taxable banking transaction. A taxable
banking transaction has been defined in clause (8) of section 94 of the Finance
Act, 2005. Broadly, there are two categories of transactions: cash withdrawal
and receipt of cash on encashment of term deposits.
3.2 A cash withdrawal would fall within the scope of a
taxable banking transaction if it satisfies the following conditions:
(i) The cash withdrawal (by whatever mode) is
from an account other than a savings bank account.
(ii) The account is maintained with any
scheduled bank.
(iii) The amount of cash withdrawn on a single day
from the same account should exceed Rs.
25,000 in the case of an individual or a
HUF or Rs. 1,00,000 in the case of any other person.
Similarly, a receipt of cash on encashment of term deposits would fall
within the scope of a taxable banking transaction if it satisfies the following
conditions:-
(i)
The cash is received on encashment of a term deposit or deposits.
(ii)
The term deposit or deposits are in any scheduled bank.
(iii)
The amount of cash received in a single day exceeds
Rs25,000 in the case of a deposit or deposits in the name of an individual or a
HUF or Rs. 1,00,000 in case of any other person.
For this purpose "scheduled bank" means the State Bank of India
constituted under the State Bank of India Act, 1955, a subsidiary bank as
defined in the State Bank of India (Subsidiary Banks) Act, 1959, a
corresponding new bank constituted under section 3 of the Banking Companies
(Acquisition and Transfer of Undertakings) Act, 1970, or under section 3 of the
Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980, or any
other bank being a bank included in the Second Schedule to the Reserve Bank of
India Act, 1934.
3.3 The value
of the taxable banking transaction shall be the amount of cash
withdrawal or the amount of cash received on encashment of a term
deposit or deposits, as the case may be, on any single day.
3.4 Multiple
withdrawals of cash from the same account or multiple receipts of cash on
encashment of a term deposit or deposits in the name of the same person on any
single day shall be treated as a single taxable banking transaction. Therefore,
if an individual were to withdraw Rs. 80,000 in a single day in multiples of
Rs. 20,000 from one account, he would be liable to BCTT on the aggregate cash
withdrawal of Rs. 80,000. However, if the individual maintains two or more
accounts in a bank and withdraws upto Rs. 25,000 from each account in a single
day, he would not be liable to the banking cash transaction tax.
3.5 Transactions
of withdrawal of cash from a bank account or receipt of cash on encashment of
term deposit or deposits (with a scheduled bank) on any single day not
exceeding Rs. 25,000 in the case of individuals and HUFs and one lakh rupees in
the case of any other person, are exempt from levy of this tax. However, in
respect of transactions in excess of these limits, no benefit is available in
respect of the exemption limit. For example, in respect of a transaction of
withdrawal of cash of thirty thousand rupees on any single day from a current
account maintained by an individual with a scheduled bank, BCTT is leviable on
the amount of Rs. 30,000 and not on the excess of Rs. 5,000 over the exemption
limit.
3.6 It is also
clarified that where the cash withdrawals are from different branches of a bank
on a single day, such withdrawals will not be aggregated for the purposes of
levy of BCTT. Similarly, cash receipts on encashment of term deposits with
different branches of a bank on a single day will also not be aggregated for
the purposes of this levy. Further, transactions of cash withdrawal and cash
receipts on encashment of term deposits on a single day will also not be
aggregated for the purposes of this levy.
3.7 Further, if
cash is withdrawn by using a credit card, such withdrawals will not be subject
to BCTT. However, if cash is withdrawn by using a debit card, such withdrawals
from any account other than a savings bank account will be liable to BCTT.
4. Taxable Entities (Who is liable to pay
the tax?):-
4.1 The banking
cash transaction tax is payable by every "person" as defined
in clause (31) of section 2 of the Income-tax Act. It also includes an office
or establishment of the Central Government or the Government of a State.
Therefore, amongst others, the following persons are liable to the banking cash
transaction tax:—
(i) An individual,
(ii) A Hindu undivided family,
(iv)
a company,
(iv) A firm,
(v)
an association of persons or a body of individuals,
whether incorporated or not,
(vi)
a local authority,
(vii)
every artificial
juridical person, not falling within any of the preceding items, and
(viii) an office or establishment of the Central
Government or the Government of a State.
4.2 If the
transaction relates to withdrawal of cash from an account with a scheduled
bank, the BCTT is payable by the person in whose name such account is
maintained. Similarly, if the transaction relates to receipt of cash on
encashment of term deposit or deposits, the BCTT is payable by the person who
receives such cash.
5.1 BCTT is
applicable to the whole of
5.2 If a person
withdraws cash outside
6.1 The rate of
BCTT is 0.1 percent (10 basis points) of the value of the taxable banking
transaction.
7. Point of collection (When is the tax to
be collected by the bank?):-
7.1 The tax is to
be collected by the bank at the time of the transaction. For example, when cash
is withdrawn in excess of the specified limit, the bank will debit the amount
of cash withdrawn and also the amount of BCTT payable thereon. Similarly, in
the case of receipt of cash on encashment of term deposit, the bank is required
to deduct the amount of BCTT payable thereon and pay the balance to the person
encasing the term deposit.
7.2 The
responsibility for collecting the BCTT rests with the bank in which the
transaction takes place. In the event of failure to do so, the amount of BCTT,
which was otherwise collectible, is required to be paid by that Bank to the
credit of the Central Government.
8. Remittance of tax (When is the tax
payable to the account of the Central Government?):-
8.1 The BCTT
collected by a scheduled bank during a calendar month will have to be paid by
the bank to the credit of the Central Government by the fifteenth day of the
month immediately following that month. For example, the tax
collected/collectible by the bank during the month of June 2005 will have to be
paid by 15th July 2005.
8.2 Further, it is
clarified that the scheduled bank will have to pay to the Central Government
the tax collected by all its branches. The branches are not required to
directly remit the tax collected by them to the account of the Central
Government. For example, if a bank has ten branches, a single remittance of the
aggregate collection is required to be made and not ten separate remittances to
the account of the Central Government.
9.1 The BCTT is
applicable in respect of all taxable banking transactions entered into on or
after 1st June 2005.
10.1 The information system will comprise of three
databases: the primary database, secondary database, and the tertiary database.
The primary database will comprise of the original transaction records, like
bank ledger, cheques and daily scrolls of the bank. This will not be required
to be transmitted to the tax authorities. However, it will have to be made
available to the tax authorities as and when required. Since the banks are
otherwise required to maintain these details/records, no additional
responsibility has been cast under the BCTT.
10.2 The secondary
database will comprise of a computerized banking scroll summarizing the
primary data so as to reflect transaction-wise information relating to BCTT.
The secondary database is designed so as to provide such information as
provided in Form No 1 notified under the BCCT Rules 2005. This database will
not be required to be transmitted to the tax authorities.
However, it will have to be made available to the tax authorities as and
when required.
10.3 The tertiary data will be a monthly summary
of the secondary data and will be structured along the pattern indicated in Form
No 2. This database does not provide for transaction wise details. The
tertiary data will be required to be furnished by a bank in respect of all its
branches on a magnetic media like a computer floppy or CD-ROMs, etc., every
month to a designated authority, namely Director General of Income Tax
(Investigation), Delhi within one month from the end of the relevant month.
10.4 The annual return required under section 98 shall be
the annual summary of secondary data as in Form No. 3 and shall be furnished on
a computer media by 31st July immediately following the Financial Year in
respect of which such return is to be furnished. If the bank fails to file the
annual return, the Assessing Officer is required to send him a notice calling
for such annual return.
11.1 The law provides for assessment on the basis of
annual return filed by the bank. For this purpose, the Assessing Officer shall
make an assessment of the value of taxable banking transactions entered into in
a scheduled bank during the relevant financial year on the basis of the return
filed by the bank (assesses) and on the basis of such accounts or documents or
other evidence as may be submitted by the assesses. Assessing Officer shall
determine the amount of BCTT payable or refundable on the basis of such
assessment. Forms of notice of demand have been prescribed in rule 9.
12.1 If a bank deposits to the account of the Central
Government BCTT in excess of its final liability determined on assessment, the
excess amount will be refunded to the bank. However, the bank is required to
refund the same to the persons from whom it was collected within 30 days of
receipt of refund from the Government.
13.1 The law
provides for appeal against the assessment order to the Commissioner of Income
Tax (Appeals). Further, where the assessee is aggrieved by the order of the
Commissioner of Income-tax (Appeals), he can file an appeal to the Appellate
Tribunal. The forms for filing of appeal are prescribed in the rules.
14. Applicability of the provisions of the
Income- tax Act:-
Section 106 of the said Chapter provides that sections 120, 131, 133A, 156,
178, 220 to 227, 229, 232, 260A, 261, 262, 265 to 269, 278B, 282 and 288 to 293
of the Income-tax Act, 1961, shall apply in relation to the banking cash
transaction tax as they apply in relation to income-tax.
Other provisions of Chapter VII of the Act and the rules are self
explanatory and are not being explained here.
16. Deduction under Income- tax Act:-
16.1 Consequent upon
levy of BCTT, section 36 of the Income-tax Act has been amended so as to provide
that the BCTT paid during a year by a person on taxable banking transactions
entered into by him during the course of business or profession shall be
allowed as deduction in computing the income from business or profession for
the purposes of the Income tax Act.