Cash withdrawal tax hurts UP pensioners

The cash transactions tax, introduced in the Budget this year, is hurting the pensioners of Uttar Pradesh. The banks are deducting the tax on the withdrawals made by the district treasuries for cash disbursement to the pensioners.

Besides, the police are bearing the brunt of the tax because salaries are being given out in cash to the jawans of the Provincial Armed Constabulary (PAC).

The cash became effective from June 1, and banks in several districts of UP have deducted the tax at the rate of 0.1 per cent on the withdrawals of Rs 100,000 or above made by the treasury department from one account in a day.

Though retired state employees get their pension through banks, a large number of them get it from the district treasuries. They are the ones getting old-age pension and widow pension.

Official sources said here the UP government asked Revenue Secretary K M Chandrashekhar to exempt the withdrawals made by the district treasuries.

The revenue secretary has recently informed the UP government the Union finance minister has been apprised of the fact that government offices or establishments were required to withdraw large sums for paying salaries to Group C and D employees and therefore they will have to bear this liability.

Chandrashekhar said the finance minister had suggested the employees, including daily wagers, open bank accounts and accept salary payments by cheque because this would help the Central and state governments to cut the banking transaction tax liability.

Finance department officials say besides the pensioners, the jawans of the PAC are also paid cash salaries because over two-thirds of the force is constantly deployed and frequently shifted from one troubled spot to another.

The state government has banned cash withdrawals of over Rs 100,000 at one go by any government department. Finance Secretary BM Joshi, in an order issued on July 4, said cash payment to private firms and contractors should not exceed Rs 2,000 and no cash payment would be made to educational institutions and other government-aided bodies.

He said the payment of salaries to daily wagers should be made from the banks. He has directed the small pensioners be encouraged to open bank accounts.

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Hard hitting facts

• Banks are deducting tax on the withdrawals made by the district treasuries for cash disbursement to the pensioners
• Police are bearing the brunt of the tax because salaries are being given out in cash to the jawans of the Provincial Armed Constabulary
• The cash tax became effective from June 1, and banks in several districts of UP have deducted the tax at the rate of 0.1 per cent on the withdrawals of Rs 100,000 or above made by the treasury department
• Sources said the UP government asked Revenue Secretary K M Chandrashekhar to exempt the withdrawals made by the district treasuries
• The revenue secretary has informed the UP government that the Union finance minister has been apprised of the fact that government offices were required to withdraw large sums for paying salaries to Group C and D employees