E-payments: Govt may provide 2% GST relief

New Delhi: The government is planning to give 2% relief over the applicable GST tax rate in case of digital payments for the bills up to Rs 2,000, in a move of discouraging cash payments.

As per a source of TOI, “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.”

According to sources, the proposal which may give the benefit in the form of a discount or cash-back – is being discussed between the finance ministry, RBI, cabinet secretariat and ministry of electronics and IT.

A meeting held to analyse the digital payments post demonetisation and was attended by IT minister Ravi Shankar Prasad and senior officials from other wings of the government, including the finance ministry and the cabinet secretary’s office.

The need to boost digital payments has been raised by Prime Minister Narendra Modi himself, prompting various departments of the government to go on overdrive and facilitate their greater acceptance.
Addressing the nation on the 71st Independence Day, Modi had asked people, especially the youth, to use less cash.

“The world’s largest population of youth is in India…This is the age of information technology. So, we should move ahead in the direction of digital transactions,” Modi had said.

“Transactions of up to Rs 2,000 are very high in volumes and if an incentive can be given here, it will provide an impetus to digital payments while also facilitating the entry of more people within the formal economy.This will help plug in leakages while playing a credible part in countering the development of black money.”

The source, however, said it is not yet clear what route the government will suggest for providing the 2% incentive. “The matter is with the finance ministry and all these issues will be worked out as we move forward on the proposal.”

Apart from the 2% relief on smaller transactions, the government is also considering other initiatives to push the adoption of digital payments and transactions. “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 said.