Government May Give Two Per Cent Relief On GST For Digital Payments, Says Report

In a move aimed at discouraging cash payments, the government may give a 2 per cent incentive over the applicable Goods and Services Tax rate in case of digital payments, where the bill is up to Rs 2,000, Times of India has reported.

The proposal is being discussed between the Finance Ministry, Reserve Bank of India, cabinet secretariat and Ministry of Electronics and Information Technology, and may be introduced in form of a discount or cash-back. The need to boost digital payments, the report say, may have been raised by Prime Minister Narendra Modi.

"The idea is to incentivise all kinds of digital payments, especially smaller transactions, in line with the government's plan of making India a less-cash economy," the daily quoted a source as saying. "There will be new measures that will be announced on this front in the coming time to strengthen the government's resolve on the electronics payment front," the source added.

The move comes at a time when the number of debit card transactions on ATMs has slumped to around 660 million a month from over 750 million before demonetisation. The number of ATMs, a report in the Economic Times last week said, is stagnating around 2 lakh and shown hardly any growth in the past six months.

Moreover, digital transactions on point-of-sale terminals have ‘increased stupendously’, latest Ecoflash report released by the State Bank Of India had pointed. The report says demonetisation has pushed the country at least three years ahead in the realm of digital payments in just seven months.