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TMI BlogFinance Act, 2005 - Explanatory Notes on the provisions relating to Banking Cash Transaction TaxX X X X Extracts X X X X X X X X Extracts X X X X ..... Chapter. The rules have since been formulated and notified vide S.O. 737 (E), Dated 30-5-2005. The salient features of this levy are explained in the following sections. 2. Objective 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 propo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble 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 Rs. 25,000 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 secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al 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 lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion (1) of section 93]. Thus, BCTT shall not be charged in respect of transactions in an account maintained in any branch of a scheduled bank if such branch is situated in the State of Jammu and Kashmir. Similarly, if a term deposit has been made in a branch of a scheduled bank and if such branch is situated in the State of Jammu and Kashmir, the receipt in cash on encashment of such deposit will not attract the BCTT. However, it may be clarified that if the scheduled bank is incorporated in the State of Jammu and Kashmir, the taxable banking transactions will be liable to BCTT if the account is maintained or the deposit is made, in a branch of such bank situated outside the State of Jammu and Kashmir. 5.2 If a person withdraws cash outsi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lectible by the bank during the month of June 2005 will have to be paid by 15-7-2005. 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. Commencement 9.1 The BCTT is applicable in respect of all taxable banking transactions entered into on or after 1-6-2005. 10. Information system 10.1 The information system will comprise of three databases: th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 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. Assessment 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 (assessee) and on the basis of such accounts or documents or other ..... X X X X Extracts X X X X X X X X Extracts X X X X
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