Promoting Electronic Transactions - Govt Actions

Dear Friends:

Through our various whitepapers on subjects like corruption, black money, doing business we have been submitting recommendations to Government to minimize cash transactions in the system and promote electronic transactions.

We are pleased to share with you that the government has come out with a raft of proposals to encourage electronic transactions, including income tax benefits for payments made through debit or credit cards, a move aimed at cracking down on black money. Following is being evaluated:

Transaction charges on card payments at petrol pumps, gas agencies and railway tickets could be done away with.

The government may also make it mandatory for all transactions above Rs1 lakh to only be conducted electronically.

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

The e-transactions will include those made through debit/credit cards, mobile wallets, apps, net banking, electronic clearing service, National Electronic Fund Transfer and immediate payment service (IMPS).

The government is also looking at encouraging shopkeepers and traders to accept electronic payments rather than cash.

“Appropriate tax rebate can be extended to a merchant if at least say 50% value of the transaction is through electronic means. Alternatively, 1-2% reduction in value added tax could be considered on all electronic transactions by merchants,”.

Utility service providers such as electricity companies and telecom operators could offer a discount if subscribers paid their bills electronically, similar to state-owned BSNL that provides an incentive of 1% of the billed amount on electronic payments.

The government is also considering a levy of a nominal cash-handling charge on transactions greater than a specified level, implying that cash payment beyond a certain threshold may attract a transaction fee.

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 lakh in a year. The ceiling could be raised to Rs 5 lakh or more.

The government also proposed appropriate changes in the regulatory structure, if required, to promote mobile-based payment systems.

If you have inputs on additional ways through which electronic transactions can be promoted and cash transactions minimized, please share them.

Together, we have been creating the awareness, letting the issues, root cause and specific solutions be known to the top Government decision makers. This sets the stage for Government action in many cases because there is accountability to over 200,000 citizens. Some actions and reviews may take time but the idea is to get the Government to deliver them in the 5 year period as outlined in the manifesto.

I thank you for your continued participation in the circle!

Rajendra Pratap Gupta more