Give tax breaks for digital payments, says Niti Aayog

Amitabh Kant. File photo

Amitabh Kant. File photo  

Niti Aayog has proposed giving tax breaks to consumers and merchants for debit or credit card payments.

The government think-tank has also suggested levying surcharge for cash transactions beyond a set limit to encourage electronic transactions.

At a recent meeting with Prime Minister Narendra Modi, Niti Aayog Chief Executive Officer Amitabh Kant pitched for encouraging e-payments for driving online commerce as well as bringing in greater transparency and higher tax collection for the government.

Encouraging digital payments

“In the presentation to the PM, it was suggested that to encourage digital payments, tax rebates be given for such payments —similar to what has been adopted by South Korea. In South Korea, the government promoted electronic payments by providing tax breaks for both shoppers and merchants on card transactions,” according to an official aware of the meeting.

At the same time, Niti Aayog has suggested discouraging use of cash by levying a surcharge on cash transactions beyond a certain threshold.

Mobile wallets

“It has also been recommended that mobile wallets be allowed to participate in one of the government’s key reforms – Direct Benefit Transfer Scheme – for subsidies, minimum wage payments for various government schemes and other payments, using JanDhan, Aadhaar and Mobile (JAM),” the official said.

In the meeting, Mr. Kant had pointed out that while there was a sharp uptick (50 per cent rise) in e-payments in the past few years, 78 per cent of transactions were still cash-based. The number of transactions in digital channels increased from 1.1 billion in 2012-13 to 1.7 billion in 2013-14 and 2.3 billion in 2014-15.

Growth driver

Stating that e-commerce was a growth driver for the economy, Mr.Kant, during the meeting, observed it contributed about only one per cent to the total retail market as compared to 14 per cent in China, the official said.

“Niti Aayog, in the presentation, pointed out that e-commerce market in China in 2015 was pegged at $650 billion. This was driven by factors such as liberal payment guidelines, strong customer protection laws and steep rise in Internet penetration,” the official said.

The government think-tank has also pitched for stronger policy for protection of interests of online shoppers.

“It was pointed out that existing legislation does not recognise e-commerce consumers. The Aayog recommended early enactment of Consumer Protection Bill 2005 introduced in Lok Sabha in October 2015 and updating National Consumer Helpline regularly for e-commerce complaints,” the official said.

For example, in China, on one hand, online shoppers can return goods within seven days without assigning any reason and on the other, it is mandatory for sellers to be registered and compensate users in case of fraud, among other things.

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Printable version | Feb 22, 2020 7:17:31 PM |

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