Govt seeks to build transaction history of individual to curb black money and for financial inclusion
GN Bureau | June 23, 2015
Are you willing to take income tax benefits by using credit or debit cards for host of payments? The government feels you should consider this. It is proposing tax benefits for people making payments through credit or debit cards. This is also to boost digital payments and encourage non-cash transactions.
The initiative will result in building transaction history of an individual to enable improved credit access and financial inclusion, reduce tax avoidance and stop counterfeiting of currency.
The government draft on this policy is available on mygovt.in and citizens can send suggestions on the proposals. click here
The e-transactions, according to the draft, will include the ones made through debit/credit cards, mobile wallets, mobile apps, net banking, National Electronic Fund Transfer (NEFT), and other similar modes.
The goal of the initiative is to provide the necessary incentives to use e-transactions to replace the use of cash either in government transactions, or in regular commerce over a period of time through policy intervention.
At present there are about 56.4 crore debit cards and 11.25 lakh point of sale terminals in India. These proposals were prepared by the government after consultations with various stakeholders including RBI, NPCI, NIBM, public and private sector banks, card service providers, mobile service providers, research institutions and government departments.
What are the salient features:
1.Tax benefits in terms of income tax rebates to be considered to consumers for paying a certain proportion of their expenditure through electronic means.
2.No transaction charges will be levied on purchase of petrol, gas and rail tickets with plastic money.
3. Utility service providers could be advised to give a discount to users for small ticket payments online like BSNL, which provides an incentive of 1% of the billed amount when payment is made online.
4. Mandatory to settle high value transactions of more than Rs 1 lakh through electronic mode.
5. Tax rebate to shopkeepers if they accept a significant value of sales through debit or credit cards. 1-2% reduction in VAT could be considered on all e-transactions.
6. Government departments to adopt national E-payment gateway ‘PayGov India’ for collection of revenue, fee, penalties etc.
Such a proposal was hinted during the budget speech by union finance minister Arun Jaitley. He had said that one way to curb the flow of black money is to discourage transactions in cash.
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