The Union Cabinet on Wednesday approved several steps to promote cashless transactions, which include mandatory card-based or electronic payments beyond a prescribed threshold.
Some of the other major steps approved by the Cabinet include the withdrawal of any additional charge currently imposed on card or digital payments by various government entities and the introduction of the required infrastructure for digital payments in all government offices.
The Cabinet also approved the rationalisation of the merchant discount rate (MDR) on card transactions and telecom service charges for digital financial transactions to promote mobile banking.
With this decision, the government has completed its promise for such measures made in the previous Budget. However, the details of these incentives were not shared in formal communiqué of the Cabinet’s decision.
“Promotion of payments through cards and digital means will be instrumental in reducing tax avoidance, migration of Government payments and collections to cashless mode, discourage transactions in cash by providing access to financial payment services to the citizens to conduct transactions through card/ digital means and shifting payment ecosystem from cash dominated to non-cash/less cash payments,” according to a government statement.
In his Budget speech, Finance Minister Arun Jaitley had said that one way to curb the flow of black money is to discourage transactions in cash. Towards this, he proposed to introduce several measures that would incentivise credit or debit card transactions.
Later in the year, the government also proposed to levy a nominal cash handling charge on cash transactions above a specified level, though this was not included in the steps approved by the Cabinet on Wednesday.
