The immediate uproar in the Lok Sabha when the FM announced levying a 0.1 per cent tax on cash withdrawals of over Rs. 10,000 is finding echoes across all sectors of the economy.

“This is counter-productive: if the aim is to track black money, there are other ways of achieving that purpose. Banks have computerized their working so it is possible for them to track such transactions without charging taxing” said Madhur Bajaj, Vice Chairman, Bajaj Auto Ltd.

Kumar Gera, Managing Director, Gera Developments, questioned the need to keep it as a value of the total amount. “If the intent is to track black money, keep the charge at Rs. 10, irrespective of the value of the transactions. Why must it be 0.1 per cent of the transaction? After all, people working in remote areas, on dams, in mines and other infrastructure projects, all get paid in cash. So, we have people going out in jeeps every week, having withdrawn large amounts of cash. Either there has been no serious application of the mind or a revenue stream is being created under the garb of tracking black money” Mr. Gera said.

Opposition to the move was expected to come from sectors where petty cash requirement is high. However, everyday transactions will also be impacted, such as hospital admissions, where cash has to be paid first before admission.