Reportedly technology firms on Friday welcomed the move to levy two percent tax deduction at source (TDS) on cash withdrawal exceeding Rs. 1 crore in a year from a bank account, while small businesses warned it would have an adverse impact on the economy. Delivering her maiden budget speech on Friday, Finance Minister Nirmala Sitharaman said the proposal to levy two percent TDS was aimed at discouraging the practice of making business payments in cash.
"This move will discourage spending which will be a big blow to the economy. There are both pros and cons of a digital payments ecosystem. india is not fully equipped to leverage this system," said New delhi based businessman Ajit Khosla who deals in money transfer, travelling and remittance business.
"For example, while customer liability is limited in case of fraudulent electronic transactions, we do not immediately get the refund. This could be a huge problem for those with limited capital, especially when one is forced to do business only through digital payments”. Khosla said that he is currently required to withdraw about Rs. 2 crores a year and uses financial services such as Western Union and MoneyGram. Naresh Kumar, owner of Falcon Cargo Movers in Paharganj, New delhi agreed with Khosla.
