Going Forward, Government to Tax Cash Transactions

New Delhi: NITI Ayog CEO Amitabh Kant on Friday said that the government had "long-term plans" to impose a cess on cash transaction in order to encourage digital transactions.

Addressing the annual general meeting of FICCI, Kant said that the all modes of digital transactions had witnessed manifold increase since the demonetisation decision, announced on November 8.

NITI Ayog CEO Amitabh KantEarlier, there was a charge of 1.5-2 percent on digital transaction when its volume was low. However, its volume has increased now. Since November 8 it has gone up by 316 percent for RuPay, 271 percent for e-wallets, 119 percent for UPI, 1,202 percent for USSD and 95 percent for POS (Point of Sale).

Now, volume of digital transaction has increased, so charges on it will be low. The Merchant Discount rate (MDR) should fall. The government has already provided 11 different incentives (to encourage digital transactions).

In the long term, the government has intention to make cash handling more expensive and digital transaction extremely cheap.

NITI Ayog CEO Amitabh KantThere would be no charge on digital transaction while there will be cess on cash transaction. This is how economy will move if you want to push digital transaction.

He emphasised that digitisation was necessary for the country to become a $10 trillion economy and sustain a 7.5 per cent growth as it cannot afford to have a parallel economy generated by high level of cash transactions.

Kant said that the cash shortage that induced due to demonetisation of old Rs 500 and Rs 1,000 currency notes was to be ended by mid-January next year. He added that the government was going to spend Rs 340 crore in next few months' time to promote digital transaction.

Various incentive schemes were announced to promote digital payments such as 'Lucky Grahak Yojana' and 'Digi Dhan Vyapari Yojna', he said, while assuring that the merchants would not be harassed by tax official by way of scrutiny of the previous years of books of accounts.

Kant said about 30 crore people in the country without mobile connections will be able to do digital transaction using Aadhaar and thumb impression. He gave example of ration shops in Jharkhand, which use the Aadhaar enabled payment system.

--IANS