Traders have started bypassing the banking tools of money transfer by transacting their money mainly through hawala and hundi system to avoid payment of 0.3 per cent WHT imposed by the government in July this year.
Trade bodies and banking officials claim that the banking transactions volume in banks located in major business centres has decreased significantly. But they are unwilling to share the relevant data to show the exact amount of financial loss caused to the national exchequer and the banking industry through this tax evasion.
The traders who are non-filers are now mostly making their payments in cash and hired the security guards, installing safes in their shops or offices. In this way, they are expending more than 0.3 or 0.6 per cent on their money transfers, however they are successful to remain out of tax net.
A dealer said that traders have installed coffers in their godowns where they keep money and make payments in cash avoiding banking channels. They have also started preferably dealing in highest denomination currency notes of Rs5000 notes to easily handle the amount.