Incentives for card payments on anvilbusiness Updated: Dec 21, 2015 00:43 IST
The government had proposed income tax benefits for people making payments through credit or debit cards.(Shutterstock image)
The government plans to come out with a set of measures to incentivise credit and debit card transactions as part of a broad strategy to wean people away from using cash and encourage banking and electronic payment channels.
“A draft Cabinet note has been circulated for comments,” the Mid-Year Economic Analysis, tabled in Parliament on Friday, said in an annexure noting.
Last week, the government notified that from January 1, individuals will have to disclose their income tax permanent account numbers (PAN) for cash transactions above Rs 2 lakh as also settling hotel bills that exceed Rs 50,000.
Quoting PAN will also be mandatory for those travelling overseas while booking air tickets and paying for tour packages if the total transaction amount exceeds Rs 50,000.
PAN would also be required to open a bank account, other than the one under the Pradhan Mantri Jan Dhan Yojana.
Another set of measures are expected in the coming months that will likely contain details on specific incentives for using electronic modes such as credit and debit cards.
The government had first indicated its intent to announce such measures in the budget.
In June, the finance ministry had put out a paper “Draft Proposals For Facilitating Electronic Transactions” seeking public comments on a set measures, including income tax benefits for individuals making payment through debit or credit cards. The paper had also proposed to do away with transaction charges on card payments at petrol pumps, gas agencies and railway tickets.
Besides, according to the paper, high-value transactions of more than Rs 1 lakh could be allowed to be made only through electronic means. Last week’s measure to make it mandatory to quote PAN for cash payments above Rs 2 lakhs is seen as an indication that the government may eventually relax some of the thresholds proposed in the draft paper floated in June.
The draft did not specify the nature of tax sops that the government could offer on spending through cards and other electronic forms. The Centre was also looking at incentivising shop-keepers and traders to accept electronic payments rather than cash.
Last Tuesday, while announcing the threshold levels for mandatory PAN disclosure, revenue secretary Hasmukh Adhia had said that “to collect information on certain types of transactions from third parties in a non-intrusive manner, the income-tax rules require quoting of PAN where the transactions exceed a specified limit”.