Under pressure to check the rise in use of cash, the FM is preparing to give new incentives to encourage digital transactions. This time around, traders may be given rebates on payment of GST levy.
Sources in the government said tax rebate to traders paying gst levy digitally may have to pay less than those who pay through cash. They may even be considered for income tax rebate.
After the recent data by the RBI showing cash use is back at the pre-demonetisation levels, the Prime Minister’s Office has asked the Finance Ministry to look for ways to discourage the trend, or else the whole purpose of demonetisation might get defeated.
The demonetisation push for cashless economy has so far worked very slowly and the recent RBI data showed that 15 months after demonetisation, the currency in circulation at Rs 18.27 lakh crore is back at pre-demonetisation levels.
A decision on incentives may come as early as in the May 4 meeting of the GST Council, sources said, adding that the Finance Ministry is currently weighing the financial implications of the same.
Recently, the government had announced a cash-back plan of Rs 51 on a minimum transaction of Rs 100 for the first time users of BHIM UPI. For the next 20 unique transactions, the incentive was up to Rs 25 per transaction. For a further 25-50 transactions, the incentive was fixed at a total Rs 100, and so on.
The government has also waived the MDR charges on the transaction of 2,000 rupees made through debit card, BHIM UPI or Aadhaar-enabled payment system to promote digital transactions, starting from January 2018, for the next two years. However, the cards have not been used.
Recently, a study by CAIT had said that 95% transactions are still done in cash in the country, and there is an acute shortage for Point of Sale terminals. A trader registered under GST has to pay tax on a monthly basis on or before the 20th of the succeeding month. Traders opting for composition levy have to pay tax on quarterly basis.