CM’s panel on Digital Payments recommends Tax levy on Cash Transactions of Rs 50,000 and above

The Chief Minister’s Panel on Digital payments recommended Tax on Cash Transactions above Rs 50,000, abolish banks’ interest on credit card transactions.

The panel also suggested Tax refund to consumers on digital payments and extend Rs 1,000 subsidy on smart phones to promote a Cash less and digital economy.

The CMs Committee on Digital Payments led by the convener and  Andhra Pradesh Chief Minister Chandra Babu Naidu submitted the interim report on Digital Payments to the Prime Minister Narendra Modi.

Chief Ministers of Madhya Pradesh, Maharashtra, Sikkim along with the Vice-Chairman of NITI Aayog Shri Arvind Panagariya and CEO NITI Aayog Shri Amitabh Kant were present on the occasion.

Later addressing a Press Conference  at NITI Aayog, the convener of the CMs Committee on Digital Payments Andhra Pradesh Chief Minister, Shri Chandra Babu Naidu shared the highlights of the recommendations in the interim report.

The following are the important recommendations in the report;

  • Relief in prospective taxes for encouraging merchants to accept digital payments & no retrospective taxation to Merchants doing digital transactions.

  • Tax incentives to be extended to Micro ATMs, Biometric Sensors etc. Domestic production to be encouraged.

  • Tax refund for consumers using digital payment upto a certain proportion of annual income.

  • For Aadhaar Pay, Biometric (FP & Iris) sensors to be provided at 50% subsidy to all merchant points.

  • AEPS to be promoted by incentivising & not charging MDR.

  • A subsidy of up to Rs.1000 to be provided for smart phones for non-income tax assesses or small merchants.

  • All payment banks and BCs to be made interoperable through AEPS.

  • Provide infrastructure for 1,54,000 post offices by way of interoperable Aadhaar enabled Micro-ATMs.

  • Create fund from savings generated through cash-less transactions for incentivising acquiring bank acceptance infrastructure creation in semi-urban and rural areas.

  • Contactless payments to be promoted for travelling in buses & suburban trains in metro cities.

  • UPI App should contain a common interoperable UPI QR Code. Banks to encourage the common QR Code at merchant location.

  • Rural and Urban Cooperative Banks should be onboarded to Digital Transactions mode immediately.

  • Aadhaar to be made primary ID for KYC. Section 57 of Aadhaar Act can be applied. Amendment to PMLA Rules required

  • To curb use of cash for large transactions consider levy of banking cash transaction Tax (BCTT) on transactions of Rs. 50,000 & above

  • Consider cap on maximum allowable limit of cash in all types of large ticket size transactions

  • All government sections like insurance, educational institutes, fertilisers, PDS, Petroleum etc to switch to digital payments

  • Lower / Zero MDR for all digital payments to Government entities.

The panel was constituted on November 30, last year after the government demonetised Rs 500 and Rs 1,000 notes.