To check tax evasion, Government on Monday proposed a tax at the rate of 0.1 per cent on cash withdrawals of over Rs 10,000 or more from banks on a single day.
This is being done "since it is felt that large cash transactions become part of black money," Finance Minister P Chidambaram said presenting the Budget 2005-06 in the Lok Sabha.
"Thus, a person withdrawing Rs 10,000 in cash would have to pay a sum of Rs 10 as tax," he said, observing the measure had being levied with a view to meeting the commitment made in the National Common Minimum Programme.
Opposition members loudly protested as the Finance Minister announced the proposal forcing Speaker Somnath Chatterjee to intervene to bring order in the House.
Chidambaram said another measure required the banks to report to the Government all deposits which are exempt from TDS on interest. "The results of these steps will be observed to bring about further measures to check tax evasion," he added.