Sense is a rarity in all the things that the govt and banks have been doing these days. I too would have expected the taxes to be applicable only on the transaction fee, but with the present situation, I do not know anymore.
The goal of banks like SBI which are in bad shape these days seems to be to put charges on anything and everything and secondly restrict people from using their money and they are using the Govt order to all banks asking them to discourage cash transactions as their reasoning. Given that context, if the newspaper is saying that they are taxing the entire transaction amount, then I would be inclined to believe that unless somebody actually went through this and can confirm that it is not the case.
I sure hope to god that you and TOI are wrong. But yeah, i wouldn't put anything past this govt. at this point...