Budget 2017: Digital economy left wanting more from Arun Jaitley
Jaitley removed all duties on devices for digital payments such as point of sales machines, finger print readers etc.business Updated: Feb 01, 2017 17:37 IST
While the digital eco-system expected a little more from finance minister Arun Jaitley, as they eagerly waited for tax sops to be doled out during his fourth budget exercise, they were left moderately happy once his speech ended.
Forty-five minutes into the speech, it felt that there is a lot in the pipeline when Jaitley waived off all service charges from e-tickets booked for train reservations, which has gone up from 58% to 68% in the past one year.
But, not much happened after that.
Jaitley removed all duties on devices for digital payments such as point of sales machines, finger print readers etc.
“To promote cashless transactions, I propose to exempt BCD (basic custom duties), excise duties, CVD (countervailing duties), SAD (special additional duty) on miniaturised card readers and mPOS micro atms standards for version 1.5.1, finger print readers, scanners and iris scanners”, the finance minister said in his fourth budget speech.
This would mean tax savings of anywhere between 5% to 12% for digital payment machine manufacturers.
To encourage merchants towards digital transactions, the budget has reduced the presumptive taxation rate from 8% to 6% on non-cash revenue. Simply put, any money that a merchant earns from digital payments only 6% will be deemed as the profit on which tax will have to be paid.
In a post-demonetisation India, the government’s stated focus has been to move towards a less-cash economy and this is where the boost to digital payments fits in.
“The stated focus areas of the budget 2017 are eliminating black money, promoting a digital economy by facilitating cashless transactions and increasing foreign investment. However, in view of impending GST, no major steps seem to have been taken from an indirect tax standpoint on these aspects,” said Rajeev Dimri, Leader, Indirect Tax, BMR & Associates LLP.
However, Jaitley also failed to give tax incentives for start-ups that would help push digital payments. The budget only proposed three years out of seven years of tax holiday, only if a startup is profitable.