To push digital payments, Finance Minister Nirmala Sitharaman announced multiple measures in her maiden Budget, including levying 2% tax deducted at source on cash withdrawals exceeding ₹1 crore in a year from a bank account.
“To promote digital payments further, I propose to take a slew of measures. To discourage the practice of making business payments in cash, I propose to levy TDS of 2% on cash withdrawal exceeding ₹1 crore in a year from a bank account,” she said.
Noting that low-cost digital modes of payment such as BHIM UPI, UPI-QR Code, Aadhaar Pay, certain Debit cards, NEFT and RTGS can also be used to promote less cash economy, Ms. Sitharaman said businesses with an annual turnover of over ₹50 crore can offer these payments options and no charges or Merchant Discount Rate (MDR) would be imposed on them or their customers.
“I propose that the business establishments with an annual turnover of more than ₹50 crore shall offer such low-cost digital modes of payment to their customers and no charges or Merchant Discount Rate shall be imposed on customers as well as merchants,” she said. These costs will be absorbed by the RBI and banks from the savings that would accrue to them as a result of handling less cash, the Minster said.
The payments industry has welcomed the proposals saying these would help create a robust payments infrastructure in the country. However, the industry leaders underlined the need for sufficient Internet penetration and data reach to achieve the aspirations.
“The budget facilitates the transformation of the economy from cash-driven one to a less-cash economy,” the National Payments Corporation managing director and chief executive Dilip Asbe said in a statement.
(With PTI inputs)
