Draft Proposals for Facilitating Electronic Transactions - Tax Benefits!
THE Finance Minister in his budget speech for the Union Budget 2015 - 16 made the following announcement:
"One way to curb the flow of black money is to discourage transactions in cash. Now that a majority of Indians has or can have, a RUPAY debit card. I therefore, proposes (as in the text - they don't bother to correct even the FM's Budget speech) to introduce soon several measure that will incentivize credit or debit card transactions and disincentivize cash transaction".
Accordingly, draft proposals for facilitating electronic transactions (E-transactions) have been prepared. Comments and views are invited on the Draft Proposals.
There is a disclaimer: The Proposals are only at the draft stage and are being placed to obtain public opinion. The proposals as they stand at this stage, do not imply any commitment from the government.
Comments/suggestions are invited on the draft and last date to share your views is 29 June, 2015 by 5:00 p.m.
Salient features:
• Tax benefits could be provided to merchants for accepting electronic payments, e.g. an appropriate tax rebate can be extended to a merchant if at least say 50% value of the transactions is through electronic means. Alternatively, 1-2% reduction in value added tax could be considered on all electronic transactions by the merchants.
• Tax benefits in terms of income tax rebates to be considered to consumers for paying a certain proportion of their expenditure through electronic means.
• Utility service providers could be advised to give a discount to users for small ticket payments through E-payments, on the lines of BSNL, which provides an incentive of 1 per cent of the billed amount if the payment is done through electronic mode.
• At present, there is a Merchant Discount Rate (MDR) of 0.75% on Debit Card transactions upto Rs.2000 and 1% on all transactions above Rs.2000. The possibility of reduction in the MDR and the rationalization of the distribution of the MDR across different stakeholders will be examined.
• Consider a levy of a nominal cash handling charge on transactions greater than a specified level.
• At present, banks have to report the aggregate of all the payments made by a credit cardholder as one transaction, if such an amount is Rs. 2 lakhs in a year. To facilitate high value transactions, the ceiling of Rs. 2 lakhs could be increased to say Rs. 5 lakhs or more.
Awareness and grievance redressal: Assurance mechanisms for fraudulent transactions to be created wherein, in case of a fraudulent transaction, the money will be credited back to customer's account and blocked and subsequently released after the investigation is complete/ limited to say a maximum of 3 months.