Pay 2% surcharge for annual cash withdrawals exceeding Rs 1 crore: FM

In a significant move to encourage digital payments in the country especially among businesses, the Finance Minister announced the imposition of 2% surcharge on annual cash withdrawals exceeding Rs 1 crore .
During her maiden budget speech as the Finance Minister, Nirmala Sitharaman said the government will continue to push digital payments adoption in the country and businesses need to digitise their transactions rapidly to help the government achieve a less-cash society.
Quoting the multiple transaction modes available like NEFT, IMPS, RTGS and UPI, the minister said that there is an urgent need to adopt these payment modes instead of cash.
Further, she added that for business establishments with an annual turnover of more than Rs 50 crore, consumers will be provided digital payment offerings without any charges. She added that banks will need to absorb the cost of processing these transactions. This can be done with help of the money they save in cash handling costs for these businesses, she said.
This move is a reflection of a long-standing industry demand for tax exemptions for consumers and businesses undertaking digital transactions. However, the government has made the first move through penalising cash payments for businesses, indicating that they are serious about taking payments digital in the country.