Govt Proposes Income Tax Rebate on Payments Through Debit Card or Credit card

With an aim to curb the flow of black money and to discourage transactions in cash, the government has proposed a draft for facilitating electronic transactions or E-transactions.

E-transactions are defined as transactions in which the customer initiates the transfer of money through electronic means, and the funds flow directly from one account to another. As these transactions can be tracked easily.

However, the proposals draft are only at the draft stage and are being placed here to obtain public opinion.

According to the draft proposal, any settling of high value transactions of, say, more than Rs. 1 lakh, mandatory by electronic means.

Tax benefits in terms of income tax rebates to be considered to consumers for paying a certain proportion of their expenditure through electronic means.

Also, tax benefits could be provided to merchants for accepting electronic payments.

The possibility of reduction in the Merchant Discount Rate (MDR)and the rationalization of the distribution of the MDR across different stakeholders will be examined, the draft proposal said.

The existing inter-change fee on Debit card or Credit Card transactions are not uniform and need to be standardized/rationalized to encourage both issuing and acquiring banks to establish and utilize acceptance infrastructure.

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