Paying ₹30,000-50,000 for ₹10 lakh annual withdrawal will be seen as a loss, the government thinks and feels this will discourage large cash transactions.

Official sources said discussions have been held internally on the fallout of such a move and the tax figure is still being discussed though it won't be less than 5 per cent, said sources adding 3-5 per cent is an appropriate figure.

As a step towards this, earlier this week, the Reserve Bank of India waived the fee currently imposed on banks for using its NEFT/RTGS payment servers. The central government also said it was setting up a panel to review charges imposed by banks on ATM withdrawals. RBI said it was doing so to boost digital transactions.