The Chief Ministers’ panel on Tuesday recommended Rs 1,000 subsidy for buying smartphones by non-tax assesses and small merchants and a cash transaction tax on withdrawals of Rs 50,000 and above in banks to encourage digital payments.
The Chief Ministers’ panel report that was submitted to PM Modi by committee representative Chief Minister of Andhra Pradesh N Chandrababu Naidu, has also made a case of lower/zero merchant discount rate (MDR) for all online payments to government entities and limit on cash in all type of hefty transactions.
Notably, the ‘Merchant Discount Rate’ is charged to a merchant by a bank for giving debit and credit card services. The CM committee including Maharashtra Chief Minister Devendra Fadnavis and Madhya Pradesh Chief Minister Shivraj Singh Chouhan has also asked the Centre to encourage Aadhaar Enabled Payment System (AEPS) by incentivizing and not charging MDR.
The other recommendations comprise tax incentives for micro ATMs, biometric sensors etc. and tax refund for consumers using digital payment up to a certain ratio of annual income.
On being asked how certain he was about integration of these recommendations in the approaching budget on February 1, Naidu said, “I am very confident about that.”
While explaining about benefit of digital payments, he said that there is lots of cost of handling physical currency because of its printing, movement and security while there is no such cost for digital currency.
