The Confederation of All India Traders (CAIT) has endorsed the idea of levy of Banking Transaction tax in lieu of VAT, Service Tax, Excise, Income Tax & other taxes. Such a tax will widen the tax base resulting in generation of more revenue to the Govt. as also providing a simple taxation system in India.
A bank transaction tax is a tax levied on debit and/or credit entries on banking transaction done by any account holder. It can be easily collected by bank based on accounting transaction through computer controlled system. It is technically easy to collect on financial transactions at point of the trade or automatically.
CAIT National President Shri B. C. Bhartia and Shri Praveen Khandelwal Secretary General of CAIT said that this tax is not a levy on financial institution but is charged on the specific transaction that are designated as taxable. Khandelwal further said that this tax can be a feasible way to raise government revenue without any hassles to citizens. It will bring corruption free tax collection mechanism.
Both Mr. Bhartia and Mr. Khandelwal further said that Australia charged a tax on customer withdrawals from bank accounts. This tax was introduced in 1982. The tax was abolished between 2002 to 2005 for introduction of goods and service tax. Various Latin American countries applied new taxation levies on bank transaction. Argentina introduced it in 1984 and abolished it in 1992..Brazil also introduced it in 1993.
Agreeing to the proposal of Baba Ramdev, the CAIT has appealed that this proposal of abolishing all Direct and Indirect taxes at all levels of levy by replacing it with Banking transaction tax and abolishing currency notes of 1,000 and 500 will be a revolutionary step. People should try to study this system of taxation to avoid multiple taxes and hundreds of tax compliances.