Bowing to strong protests, the government Monday sought to amend the controversial cash withdrawal tax by exempting savings bank accounts from its purview and enhancing the limit for individuals to Rs.25,000.


Amendments have also been proposed in another contentious scheme - the fringe benefit tax - that presumes some expenditure incurred by businesses to also accrue to employees, like on phone calls, and hence suggests a 30-percent tax.

The changes were proposed in the amendment to the Finance Bill, 2005, circulated to the members of the Lok Sabha.

The amendments also seek to hike the exemption limit for companies under the cash withdrawal tax scheme to Rs.100,000 a day from Rs.10,000 earlier.

In his budget speech Feb 28, Finance Minister P. Chidambaram had proposed a new scheme to impose a tax of 0.1 percent on all cash withdrawals over Rs.10,000 per day with a view to curbing the generation of black money.

The limit of Rs.10,000 was set for all types of assessees, whether individuals or companies. Chidambaram said banks would also be required to report all deposits that are exempt from tax deducted at source on interest.

"I am concerned about large cash transactions, especially withdrawals of cash, when there is no ostensible purpose to withdraw such large amounts of cash," the finance minister had said in his budget speech.

"These cash withdrawals leave no trail and presumably become part of the black economy."