The government on Monday proposed income Tax Benefits on Debit/Credit card for individuals making payment. The move is aimed at curbing the flow of black money and discouraging transactions in cash.
“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 Finance Ministry’s proposal said.
Finance Minister Arun Jaitley in his Budget speech had said that “one way to curb the on flow of black money is to discourage transactions in cash.”
The proposals also mandated settling of high value transactions of more than Rs. 1 lakh, only by electronic means.
The government has also proposed removal of transaction charges on card payments at petrol pumps, gas agencies and for railway tickets to encourage non-cash transactions.
“At present, government departments/central public sector undertakings/organizations levy a convenience fee/service charge/surcharge for making E-transactions (card payments) to essential commodities, utility service providers, petrol pumps, gas agencies, railway ticket counter/IRCTC etc. The feasibility of removing the charges will be examined,” the government’s proposal said.
The public has been invited to comment on these draft proposals by June 29, 2015 on the government’s online platform mygov.in.
The government also proposed tax benefits for merchants accepting electronic payments.
“Tax benefits could be provided 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 per cent value of the transactions is through electronic means. Alternatively, 1-2 per cent reduction in value added tax could be considered on all electronic transactions by the merchants,” the proposal said.