Promoting a digital economy, Union Finance Minister Nirmala Sitharaman, on Friday proposed to levy a TDS of 2% on cash withdrawals exceeding 1 crore a year from a single bank account. She also added that various cashless modes of payment should be promoted.
"To discourage the practice of making business payments in cash, I propose to levy TDS of 2% on cash withdrawal exceeding 1 crore in a year from a bank account. Further, there are low-cost digital modes of payment such as BHIM UPI, UPI-QR Code, Aadhaar Pay, certain Debit cards, NEFT, RTGS etc. which can be used to promote less cash economy," she said.
To facilitate the usage of such cashless modes of payment, she said that companies having an annual turnover of more than 50 crores should offer these avenues. She added that banks will bear the costs from these savings and necessary amendments were being made in the Income Tax Act and related acts to implement the necessary changes.
"Business establishments with annual turnover more than 50 crores shall offer such low-cost digital modes of payment to their customers and no charges or Merchant Discount Rate shall be imposed on customers as well as merchants. RBI and Banks will absorb these costs from the savings that will accrue to them. Necessary amendments are being made in the Income Tax Act and the Payments and Settlement Systems Act, 2007 to give effect to these provisions," she added.
The Union Budget 2019 is presented by the Prime Minister Narendra Modi-led NDA government after coming to power in its second term, is expected to boost spending at the cost of short-term slippage in fiscal deficit targets with the aim to lay down the road map of the Modi government 2.0 for the economy and the nation in the next five years.
Sitharaman is also the first woman to present the Union Budget since former Prime Minister Indira Gandhi who had also then held the finance portfolio. After Nirmala Sitharaman will present the Budget in the Lok Sabha, both lower and upper houses will be adjourned for the day.