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New Banking Cash Transaction Tax, would be applicable for withdrawal of Rs 25,000 and above on a single day from current and other non-savings accounts in the banks for individuals and Hindu Undivided Families from the 1st June 2005.

The savings accounts have been totally exempted from the 0.1 per cent tax on cash withdrawal. For business accounts, the 0.1 per cent tax would be applicable for any withdrawal beyond Rs one lakh on a single day.

The Central Board of Direct Taxes (CBDT) has clarified that multi transactions of cash withdrawals from an account or receipt of cash on encashment of term deposits or deposits in the name of the same person on any single day will be treated as one transaction.

A three stage reporting system will be in place for the 300 odd scheduled banks collecting the tax. Firstly, each bank branch will have to maintain a transaction wise record -- which will include, among other things, the account number, name and address of the person and the value of the banking cash transaction tax. Bank branches will not have to report these details to the IT department unless called for.

In the second stage, scheduled banks will have to furnish a monthly return form listing out just the number of taxable banking transactions entered into by each branch and the amount collected in a month. The first report such will be given by banks on July 31, this year on a computer medium.

In the third stage, banks will furnish an annual return (or a summary) of all the taxable banking transactions. The first such report will be given on July 31, 2005.

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