The Union Government on 22nd June posted in the public domain a proposal to extend income tax benefits by way of tax rebates to people who make a certain part of their payments through electronic means i.e. credit or debit cards. Also proposed is the abolition of transaction charges on purchase of petrol, gas and rail tickets when the payment is settled through credit/debit cards.
Similarly, with a view to attract shops and establishments to accept the electronic mode of payment, tax rebates are being proposed for them. The tax rebate will be available provided the establishment conducts at least 50% of the value of their sales through debit or credit cards. An alternative proposal which is also being considered is to reduce the VAT by 1 to 2 per cent on all electronic transactions by the merchants.
The government has also proposed that settling all high value transactions of over Rs 1 lakh should be through electronic mode.
The e-transactions as proposed are intended to include transactions through debit/credit cards, mobile wallets, mobile apps, net banking, Electronic Clearing Service (ECS), National Electronic Fund Transfer(NEFT), Immediate Payment Service (IMPS), or other similar means.
Quite naturally all these proposals are aimed at enticing the people and the establishments to chose electronic means over cash. Apart from bringing all transactions on record which create a history of transactions for data mining by the tax authorities, this move will also discourage cash transactions and minimise scope for counterfeiting.
The Ministry has invited comments to reach by 29th June, 2015.