PC may raise cash withdrawal cap

The FM today hinted at raising the cap and looking at "alternative" methods of tracking black money generation.

Admitting there was opposition from Congress and UPA partners to the proposed tax on withdrawal of cash, Finance Minister P Chidambaram on Wednesday hinted at raising the limit and looking at "alternative" methods of tracking withdrawals and black money generation.

He also assured the India Inc that "anomalies" in the Fringe Benefit Tax provision will be addressed so that no "legitimate" business expenditure is taxed.

"There has been a request from Congress Parliamentary Party and UPA. I am thinking of putting a different cap on cash withdrawal (that will attract the tax)," he said addressing a Ficci meeting.

Voicing concern at the huge withdrawal of cash every day, which leaves no tax trail, he said, "The purpose of the tax (Rs 10 on withdrawal of Rs 10,000 every day) is not revenue generating but anti-tax evasion."

"Huge cash withdrawal is a problem as distorts the health of the economy. We have found one way of dealing with the problem. If this is not acceptable, we will find another way."

"I am not stubborn in dealing with the problem in this way but I am stubborn in tackling the problem," he said, adding "If we can't deal with it in this manner, we can deal with it in a different way."

On the Fringe Benefit Tax, he said, "There is no intention to tax legitimate business expenditure. I have asked my people to look at the entries to see if any unintended anomalies might have crept in that need to be addressed."

"We must wait for final shape of the Finance Bill to emerge," he added.