Arun Jaitley, Union Minister for Finance and Corporate Affairs, proposed zero Customs and Excise duty on certain items related to cashless transaction devices to promote domestic manufacturing of these products.
Government has decided that no transaction above Rs 3 lakh will be permitted in cash. Accepting a suggestion by Special Investigation Team on Black Money to ban cash transactions above Rs 3 lakhs, the Finance Minister has proposed an amendment to the Income-tax Act in the Finance Bill.
Government will launch two new schemes to promote the usage of BHIM App i.e, Referral Bonus Scheme for individuals and a cashback scheme for merchants. BHIM App was launched to promote digital transactions and will unleash the power of mobile phones for digital payments and financial inclusion. 125 lakh people have adopted the BHIM app so far.
India will launch Aadhar Pay, a merchant version of Aadhar Enabled Payment System, shortly. This will be specifically beneficial for those who do not have debit cards, mobile wallets and mobile phones. A Mission will be set-up with a target of Rs 2,500 crore digital transactions for 2017-18 through UPI, USSD, Aadhar Pay, IMPS and debit cards.
Banks have targeted to introduce additional 10 lakh new PoS terminals by March 2017. They will be encouraged to introduce 20 lakh Aadhar based PoS by September 2017.
India proposed that the presumptive income tax for small and medium tax payers whose turn-over is up to Rs 2 crore will be reduced from the present 8 percent of their turnover which is counted as presumptive income to 6 percent in respect of turnover which is received by non-cash means. This benefit will be applicable for transactions undertaken in the current year also.
To promote cashless transactions, the Finance Minister in the Budget has proposed to exempt BCD, Excise/CV duty and SAD on miniaturised POS card reader for m-POS, micro ATM standards version 1.5.1, Finger Print Readers/Scanners and Iris Scanners. India proposed to exempt parts and components for manufacture of such devices, so as to encourage domestic manufacturing of these devices.
Steps would be taken to promote and mandate petrol pumps, fertilizer depots, municipalities, Block offices, road transport offices, universities, colleges, hospitals and other institutions to have facilities for digital payments, including BHIM App.
“The focus on moving India towards a more transparent and digital economy is encouraging, in order to really capitalize on the long term gains of the painful demonetization exercise. The moves to curb the black economy also bodes well for accelerated GDP growth as more of the ‘shadow economy’ becomes visible and integrated into the overall economic activity,” said Partha Iyengar, VP and Gartner Fellow.