A Rs 1,000 subsidy for the purchase of smartphones by non-tax assesses and small merchants and a cash transaction tax on withdrawals of Rs 50,000 and above in banks has been recommended by a Chief Ministers' panel today to encourage digital payments. Five Tools To Go Cashless In This Demonetization Era For Merchants
The Chief Ministers' Panel report, which was submitted to Prime Minister Narendra Modi by committee representative Chief Minister of Andhra Pradesh N Chandrababu Naidu, has also made a case of lower/zero merchant discount rate (MDR) for all digital payments to government entities and cap on cash in all type of big ticket transactions.
The 'Merchant Discount Rate' is charged to a merchant by a bank for providing debit and credit card services. The committee comprising Maharashtra Chief Minister Devendra Fadnavis and Madhya Pradesh Chief Minister Shivraj Singh Chouhan has also asked the Centre to promote Aadhaar Enabled Payment System (AEPS) by incentivising and not charging MDR.
The other recommendations include tax incentives for micro ATMs, biometric sensors etc. and tax refund for consumers using digital payment up to a certain proportion of annual income.
Explaining about the advantage of digital payments, Naidu said that there are lots of cost of handling physical currency because of its printing, movement, and security while there is no such cost for the digital currency, reports PTI.
Naidu also elaborated that with the increase of volume of digital transitions, the cost will reduce and there is huge opportunity in India because non-cash payment transitions by non-banks per capita per annum is 11 in the country as compared to 26 in China, 728 in Singapore, 355 in the UK, 142 in Brazil, 70 in South Africa and 32 in Mexico.
Similarly, the report highlights that the number of (cashless) pay points per million people are 1,080 in India as against 31,096 in Singapore, 30,078 in the UK, 25,241 in Brazil, 7,267 in South Africa, 7,189 in Mexico and 16,602 in China.
The panel made a case for relief in prospective taxes for encouraging merchants to accept digital payments and no retrospective taxation to Merchants doing digital transactions. It also suggested that for Aadhaar Pay, Biometric (FP & Iris) sensors should be provided at 50 per cent subsidy to all merchant points.
The panel said in its interim report that all payment banks and banking correspondents should be made interoperable through AEPS and also provide infrastructure for 1,54,000 post offices by way of interoperable Aadhaar enabled Micro-ATMs. Naidu also suggested insurance for all digital transactions to safeguard the interest of people going cashless. Say Bye To Paper Currency, Swipe Your Debit Card And Pay Smart