Govt. May Introduce ‘Cash Tax’ To Discourage Cash Transactions; Retailers Rejoice As Sales Increase Post-Demonetization
Govt. of India is all set to introduce the final nail in the coffin for killing cash based transactions across India, and to ensure that more and more digital transactions take place. As per some unconfirmed reports, new form of ‘cash tax can be introduced in the upcoming budget, which will severely dampen cash flow in the country, and encourage digital movement of money.
Meanwhile, India’s top retailers have claimed that demand for retail items is back post-demonetization, and they are expecting a bumper end-of-season sale in the coming months. In short, demonetization had no effect on their annual turnover.
‘Cash Tax’ For Discouraging Cash Transactions?
Some unnamed officials from the Finance Ministry have said that in the upcoming budget on February 1st, Govt. may introduce a special ‘cash tax’ on all cash based transactions in the country.
One official said, “A number of steps are under discussion”, adding, that the final decision would be taken “at the highest political level”.
Three possible decisions which Govt. may announce on February 1st, to discourage cash based transactions:
- Special ‘cash tax’ on all cash based transactions by reintroducing banking cash transaction tax (BCTT) as recommended by The Tax Administration Reform Commission (TARC), headed by Parthasarathi Shome
- Banning all cash based transactions above Rs 3 lakh
- Placing a limit of Rs 15 lakh on individual cash holding
The final decisions would be announced by Finance Minister Arun Jaitley, when he gives the Budget speech.
Retailers Rejoice As Demand Is Back Post-Demonetization
Some sections of the media, especially those who were against demonetization, had claimed that this move will destroy the retail sector. And slowing demand in consumer sector had actually brought in some fear.
However, crushing all such speculations, major retailers have jointly said that demand is now back in the market, and they are projecting bumper end-of-the-season sale in the coming months.
Govind Shrikhande, managing director at Shoppers Stop said, “Post demonetisation, November sales had turned weak. But December onwards the sales growth has been strong and in double digits,”
Although retailers admit that sales had slowed down in the month of November, but revival was witnessed in December, and January led to normal sales. Some of the retailers have said that they expecting 30-50% more sales in February-March, compared to last year.
Jitendernath Patri, chief marketing officer at Central Malls said, “The only impact of demonetisation was in the first week after announcement. We are out of it now,”
Different malls from across India share the same story.
For instance, Infiniti Mall in Mumbai reported 18% more footfalls in the month of December, compared to last year, and 12% more sales. And for the quarter ending March, they are expecting 12-15% more sales, compared to last year.
And if we talk about ecommerce portals, then due to cashless push, they have anyways witnessed massive increase in traffic and sales.
Ananth Narayanan, CEO at Myntra and Jabong said, “Post demonetisation, with this sale we have seen a 900% growth in sales over a normal day,”
What has been your experience post-demonetization? Do let us know by commenting right here!