New Delhi: A Rs 1,000 subsidy for 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 have been recommended by a Chief Ministers' panel today to encourage
digital payments.
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.
When asked how sure he was about incorporation of these
recommendations in the forthcoming budget on February 1, Naidu said, "I am
very confident about that."
Explaining about advantage of digital payments, he 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 digital currency.
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
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