The Most Authentic Guide on Personal Finance and Investments

Ebook: 101 Classic Tips on Money Management @Rs.125/- only. Grab it on Pothi.com

Tax break on credit / debit card payments soon

Good news! The Govt. is willing to give discounts and tax breaks if we use debit or credit cards and such other electronic means to make our payments.

In this regards, it has issued Draft Proposals for Facilitating Electronic Transactions. This indeed is one of the many brilliant initiatives from the Modi Government which is mere 1-year old.

Not many people appreciate it, but I believe that schemes like Jan Dhan Yojana, Swachh Bharat, Jeevan Jyoti Bima Yojana, Suraksha Bima Yojana, Atal Pension Yojana, thrust on solar / wind power are the game-changers that will transform India in next 5-7 years.

Why this push towards electronic transactions?
Two big objectives of this proposal are to (a) curb generation of black money through tax avoidance and (b) check the menace of counterfeit money or fake notes... two extremely serious challenges facing India.

In addition, making your payments through electronic channels
- would be more convenient and risk-free
- improve access to credit and bring about financial inclusion
- reduce the cost of managing physical cash

In fact, the Govt. may also make it mandatory to settle high value transactions (say more than Rs. 1 lakh) only through the electronic channels.

What is defined as Electronic Transactions?
- Credit and Debit Cards
- Net Banking
- ECS (Electronic Clearing System)
- NEFT (National Electronic Funds Transfer) [Must Read: Serious Online NEFT Money Transfer Error]
- IMPS (Immediate Payment Service)
- Mobile wallets and apps
- and similar other digital means

What incentives are being proposed in this regards?
1.  If found feasible, no convenience or transaction fee may be charged on the electronic payments made to various Govt. Departments and PSUs (such as petrol pumps, IRCTC, gas agencies, utility service providers, railway ticket counters, etc.)

2.  You could get discounts on utility bills raised by various service providers, similar to the 1% discount given by BSNL to those who make electronic payments.

3.  Govt. Departments would have a national E-payment gateway for revenue collection, penalties etc.

4.  Income Tax rebate would be granted to the consumers if they pay a certain part of their expenses through the above-mentioned electronic means.

5.  Banks may be asked to report only when the total transactions under a particular credit card exceed Rs.5 lakhs, as against Rs.2 lakhs at present.

6.  Reduce the Merchant Discount Rate on Debit Card transactions.

7.  Merchants and dealers may be granted tax rebate or benefit of reduced VAT if they conduct at least say 50% of their business through the electronic means.

8.  Rationalize inter-change fee among issuing and acquiring banks on credit / debit card transactions.

9.  Levy cash handling charges if the amount exceeds a certain value.

10. Rationalize the Rs.1.50 USSD per transaction presently levied by telecom companies for mobile payments.

What infrastructural improvements may be required?
For speed and ease of transactions, the following measures are being considered:

- Review and rationalize authentication norms for different types of transactions

- Changes in the regulations to boost mobile-based payment systems

- Increase number of Point of Sale (PoS) / Mobile PoS terminals, which at present are very few when compared to the total debit and credit cards issued

- Like ATMs, non-banks may be allowed to install white label POS terminals

- Improve broadband connectivity to enable mobile-based payments on a much larger scale

- Aadhaar based identification for authentication to be strengthened

- In cases of fraudulent transaction, the money may be credited back to the customer but blocked; and finally released after necessary investigation within say a maximum of 3 months

In short, we are in for exciting and lucrative times — imagine all the discounts and tax benefits on electronic transactions — as we move towards a cashless economy and society.

You Learn A Lot By READING... And Even More By SHARING.

Share Button

Ignorance is like a SIGNED BLANK CHEQUE... anyone can MISUSE it.

Subscribe via Email
Books by Sanjay Matai
[Click on the Pic for more info on my books.]
Powered by Blogger.

Total Pageviews