The Indian Government has put forward proposals to reduce the tax burden on electronic payments in an effort to reduce the use of cash and bring more people into the formal economy.
The draft proposals include a raft of measures to discourage cash use, including a tax rebate for merchants who accept electronic transactions and the consumers who use them, the introduction of uniform interchange rates for plastic cards, a bank-wide mandate to roll out more eftpos terminals, a cut in charges levied by telcos for processing e-payments, and a hike in cash handling fees.
Finance Minister Arun Jaitley in his budget speech, commented: "One way to curb the flow of black money is to discourage transactions in cash. Now that a majority of Indians has or can have, a Rupay debit card. I therefore, proposes to introduce soon several measure that will incentivise credit or debit card transactions and disincentivise cash transaction".
The government is inviting feedback on the draft proposals, which are available for comment until 29 June.