In India Banking cash Transaction tax is imposed for the first time by the Finance Act 2005. This tax is applicable to the whole of India except the state of Jammu & Kashmir. Chapter VII of the Finance Act 2005 and Banking Cash Transaction Tax Rules 2005 as notified by Notification No. 156/2005 dated 30.05.2005 contains the various provisions relating to it.
BCTT is a tax which is levied when an account holder withdraws cash from his account with a scheduled bank except savings account and also on receipt of cash on encashment of term deposit with a scheduled bank exceeding the prescribed limit.
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| Rate
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BCTT is levied at the rate of 0.1% of the value of the taxable banking transaction entered on or after 1.6.2005
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| Taxable banking transaction means
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Cash withdrawal on any single day from an account exceeding Rs. 25000/- if account is in the name of an individual or Hindu Undivided family (HUF) and Rupees 1,00,000/- in case the account is in the name of a person other than individual and HUF. |
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Receipt of cash on any single day on encashment of term deposits exceeding Rs. 25000/- if term deposit is in the name of an individual or HUF and Rs. 1,00,000/- if it is in the name of any other person.
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| The value of taxable banking transaction means
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1. |
(1) The amount of cash withdrawn in case of cash withdrawal transaction |
2. |
(2) In case of encashment of term deposits, the amount of cash received.
Scheduled bank includes State Bank of India, its subsidiaries, nationalized banks and any other bank which is included in the second schedule to the Reserve Bank of India Act 1934
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| By whom Payable
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BCTT is payable by a person as defined in clause (31) of Section 2 of the Income Tax Act 1961 who enters into a taxable banking transaction with a scheduled bank and includes the following: |
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- An Individual
- HUF
- Company
- Firm
- Association Of Person
- Body Of Individual
- Local Authority
- Every artificial judicial person
- An office or establishment of the Central Government or the Government of a State
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| Deposit of BCTT
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The tax collected during a particular calendar month shall be paid to the credit of Central Government by the fifteenth day of the month immediately following the said calendar month. It shall be paid by remitting it to any branch of Reserve Bank of India or State Bank of India or any other authorised bank along with a challan.
In case of default simple interest is payable @ 1% of such tax for every month or part of the month by which crediting of the tax is delayed. |
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| Penalty on failure to collect BCTT
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If the assessee (scheduled bank) fails to collect the tax then a penalty equal to the amount of BCTT which it has failed to collect is levied. |
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| Return
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Every Scheduled Bank has to file a return in Form No. 3 verified in such manner and giving such particulars as prescribed therein at the end of each financial year in respect of all taxable banking transactions to the Assessing Officer or to any other authority or agency authorized by Central Board of Direct Taxes. Such return has to be filed on or before 31 July immediately following that financial year.
A statement in Form No. 2 shall be furnished to the Income Tax Authorities regarding taxable banking transactions in respect of which it is required to collect tax during a month. Such statement has to filed on or before the expiry of the month immediately following the said month. |
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| Revised Return
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If the assessee finds any omission or wrong statement in the return filed by him or if he has not filed the return and a notice is served upon him by the assessing officer then in such cases the assessee can file the return at any time before the assessment is made.
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| Scrutiny Assessment
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For the purpose of making the assessment the Assessing officer may serve a notice on the assessee requiring him to produce such accounts and other documents as he may deem think fit. After considering such documents and other facts of the case he will determine the value of taxable banking transaction and the tax payable or the amount refundable as the case may be on the basis of such assessment.
t must be noted that no scrutiny assessment shall be made after the expiry of 2 years from the end of the relevant financial year. For example for the financial year 2005-2006 it can be made upto 31-03-2008 |
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| Rectification
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As per section 100(1) of the Finance Act 2005 the assessing officer may amend any order passed by him in order to rectify any mistake apparent from record within one year from the end of the financial year in which the order sought to be amended was passed.
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| Notice & opportunity of being heard
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In case as a result of any amendment the liability of the assessee increases or refund is reduced then such an amendment shall not be made unless a notice is served upon the assessee and a reasonable opportunity of being heard is given to him.
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| Refund |
If any refund is received by the assessee then the assessee has to pass on such refund to the person from whom it was collected within 30 days from the date of receipt of such refund.
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| Income tax and BCTT
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If any person has paid BCTT and he has also income under the head Business & Profession then he can claim deduction of the tax so paid under section 36(1)(xiii) of the Income Tax Act 1961
As per section 36(1)(xiii) of the Income Tax Act 1961 if an assessee pays BCTT during a year on the taxable banking transactions entered into by him then the tax so paid by him shall be allowed as deduction in computing the income under the head Profits and gains of business and profession. |
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Appeals |
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| Appeal to Commissioner of Income Tax (Appeals) |
| Who can appeal |
Form in which appeal has to be filed |
Time limit of filling the appeal |
Action by the Authority |
| Any assessee aggrieved by the order passed by the Assessing officer under section 99 or a rectification order under section 100 or a penalty order |
Form No. 5 |
Within thirty days
from the date of the order |
After considering the
facts of the case he may enhance, confirm reduce the assessment/penalty or he may pass any order as he may think fit.; |
| Appeal to Income Tax Appellate Tribunal (ITAT) |
| Who can appeal |
Form in which appeal has to be filed |
Time limit of filling the appeal |
Action by the Authority |
| Any assesee aggrieved by CIT(A) or Assessing officer on the directions of CIT |
Form No. 6 |
Within sixty days from the date of receipt of the order appealed against by the assessee/CIT as the case may be |
He can pass such orders as he may think fit after giving a reasonable opportunity of being heard. |
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| Rectification of mistake by ITAT
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ITAT may amend the order passed by it in order to rectify a mistake apparent from record within 4 years from the date of the order. |
| Form |
Purpose |
| Form No. 1 |
Particulars of taxable banking transactions |
| Form No. 2 |
Statement of number of taxable banking transactions entered into and BCTT collected during a month |
| Form No.3 |
Return of taxable banking transactions |
| Form No.4 |
Notice of demand |
| Form No.5 |
Appeal to CIT(A) |
| Form No.6 |
Appeal to ITAT |
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Note: A reference may be made to the relevant Acts, Rules, guidelines, circulars and notifications issued from time to time for full details. |
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The author is a member of the Institute. The views expressed herein are his personal views and do no necessarily represent the views of the Regional Council. He can be reached at mail2praveengupta@indiatimes.com |
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