Sat. Sep 19th, 2020

Finance Ministry issued draft proposals for facilitating Electronic Transactions

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On 22 June 2015, the
Ministry of Finance issued draft proposals for facilitating electronic
transaction in pursuance of the announcement made by the Finance Minister in
his budget speech for the Union Budget 2015-2016 that:

“One way to curb the flow of black money is to discourage
transactions in cash. Now that a majority of Indians has or can have, a RUPAY debit
card. I therefore, propose to introduce soon several measures that will
incentivize credit or debit card transactions and disincentivize cash
transaction.”

Accordingly, the Ministry has issued draft proposals with the object of improving
the ease of conducting transactions for an individual and for building a transaction
history to enable improved credit access and financial inclusion. The draft
proposals also aim to reduce risks and costs of carrying cash and costs of
managing cash and also to reduce tax avoidance and impact of counterfeit money
on the economy.

The measures proposed to promote wider adoption of electronic
transactions are: To examine
reduction in Merchant Discount Rate (MDR) which is presently 0.75% on Debit
Card transactions upto Rs.2000 and 1% on all transactions above Rs.2000. To
standardize/rationalize the inter-change fee on Debit/Credit Card transactions to
encourage both issuing and acquiring banks to establish and utilize acceptance
infrastructure.To provide
tax benefits to merchants for accepting electronic payments. To provide tax
benefits in terms of income tax rebates to consumers for paying a certain
proportion of their expenditure through electronic means.To consider levying
of a nominal cash handling charge on transactions greater than a specified
level.To mandate
settling of high value transactions of, say, more than Rs. 1 lakh, only by
electronic means.At present,
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 lakhs in a year. To
increase the ceiling value from Rs. 2 lakhs to Rs. 5 lakhs for facilitating
high value transaction.

The draft proposals also provide among other things for the examination
of removing the levy of the 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. levied
by the Government Departments/Central Public Sector Undertakings/Organizations.
The Ministry also proposes to advise utility service providers to give a
discount to users for small ticket payments through E-payments, on the lines of
BSNL, which provides an incentive of 1 per cent of the billed amount if the
payment is done through electronic mode.

–         
Ministry of Finance
Source: Legal news India

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