Bitter Pill Coming up in the next Budget?

In a bid to discourage cash transactions and moving towards less cash economy, Modi government is mulling a cash tax which may be introduced in the budget that will be tabled on February 1st. The SIT on Black Money has already recommended a ban on cash transactions above 3 lakh and a Rs 15 lakh limit on individual cash holding.

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The proposals of the Cash Tax were already submitted but the decision will only be taken at the highest political level. But then encouraging to cashless transactions is not that easy until the banks charge annual fees for credit cards or transaction charges at points of sale which will directly impact the end customers.

More cashless transactions will mean that more transparency in the spending of the people which also means bringing more people under Tax net and that ensures more incomes for the government. But then it will be a bitter pill for the people at the beginning.

The Union Budget this year will be tabled early. Usually, it will be introduced towards the end of February, but then will be tabled on February 1st so that the allocations will begin right from the new financial year. Along with the cash tax, the central government may also announce some incentives for cashless transactions.