Digital payment captains savour Modi Govt's Budget
The payments industry has hailed Budget proposals to cap cash transactions at Rs 3 lakh and reduce the levies on digital payment equipment, saying the moves will fasten the less-cash drive. "We welcome various measures to promote digital economy announced in the new Budget," the ItzCash head and Payments Council of India Chairman said. The industry is particularly enthused by the removal of import duty for point of sales (PoS) machines – which will be doubled in 20 lakh by June – and removing service charges on rail bookings on the country's largest e-commerce site IRCTC.
The National Payments Corporation also welcomed the moves and affirmed its support to achieve the targets. "NPCI will continue to innovate and introduce new payments mechanism to support the ecosystem," said Managing Director and Chief Executive A P Hota . He said the Corporation will support the mission of achieving 2,500 crore digital transactions for 2017-18 through UPI, IMPS, Aadhaar Pay, RuPay cards and other upcoming products.
Other proposals on the payments front introduced by the finance minister include creating a Payment Regulatory Board within RBI, replacing the existing Board for Regulation and Supervision of Payment and Settlement Systems in the RBI.
It can be noted that following the November 8 decision to scrap high value banknotes, greater pressure has come on the digital alternatives of payments to perform. Finance Minister Arun Jaitley's other proposals include launch two new schemes to promote the usage of the BHIM app including referral bonus and cash back for merchants. The minister also banned cash withdrawals over Rs 3 lakh from April with a view to move to a less-cash economy.
Atom Technologies' Dewang Neralla said tax breaks on PoS devices and other devices will ensure affordability and help foster better penetration for digital payments. The industry lobby said there is a need to look at other issues including bringing parity between physical cash and digital payment transactions, along 'interoperability' and access to a unified payment infrastructure with absorption of merchant discount rates by the government.
Meanwhile, In a relief to start-ups, Finance Minister Arun Jaitley on Wednesday proposed extending the time period for availing tax benefit for three years in the first seven years of existence. "The profit linked deduction available to the start-ups for three years out of five years is being changed to three years out of seven years," Jaitley said in his Budget Speech. For the purpose of carry forward of losses in start-ups, the condition of continuous holding of 51 per cent of voting rights has been relaxed.
This is subject to the condition that the holding of the original promoter/promoters continues. This comes as a relief to startups as they do not make profits in the first few years of operations. On the issue of removal of MAT, the Finance Minister said "it is not practical to remove or reduce MAT at present". "However, in order to allow companies to use MAT credit in future years, I propose to allow carry forward of MAT up to a period of 15 years instead of 10 years at present," he added.
Besides, the Minister has proposed to reduce the income tax for smaller companies with annual turnover up to Rs 50 crore to 25 per cent, in order to make micro, small and medium enterprises more viable and also to encourage firms to migrate to company format.
SIT welcomes ban on cash transactions above ₹3 lakh
The SIT on black money on Wednesday hailed Finance Minister Arun Jaitley's budget announcement to limit cash transactions at Rs 3 lakh but said its other recommendation to cap cash holding of an individual at Rs 15 lakh would have been a "far better" measure to check corruption.
The Chairman of the Special Investigation Team (SIT) on black money, Justice (retd) M B Shah said in order to check stash funds some "stern steps" are needed to be taken but the government also has to go by the advice of economists and others and not alone them.
"It (ban of cash transactions over Rs 3 lakh) was necessary...it is a good decision. Such a thing is prevalent in a number of countries and we have said that in our report submitted earlier. We had suggested this an year back and after a long time it has been accepted...it is good.
"But, our further suggestion to not permitting the person to hold more than Rs 15 lakh in hand or in their house is something that has not been accepted. If it would have been accepted, it would have been far better (step to combat black money)," Justice Shah told PTI.
He added the cap on cash holding "would have controlled corruption at least, as corruption is in lakhs or crores of rupees." When asked if the he was "not happy" as the SIT's cash holding recommendation has not found favour with the government, the Chairman of the high-powered panel said there are many concerns that the government has to keep in mind. Strict steps, however, are required to check the menace of illicit or unaccounted monies, he said.
"It is not a question of being not happy because suggestions are made by us and some may be accepted and some may not be accepted. It is their (government's) call. They are also advised by economists and also they are concerned with the politics of it...there is no question of my happiness...if you want to control black money then you will have have to take some stern steps. There is no alternative," he said.
Justice Shah added that the panel has been continuously suggesting anti-black money measures to the government and it will keep doing that.
When asked about demonetisation and its effects on curbing black money, the SIT chief called it a "good thing."
"It is a very good thing as once (the currency is) demonetised the persons will not be able to hold unaccounted cash and that has its own effect. But some people do mischief in (illegally) converting it...it has come to the notice of the government as the Finance Minister said in his Budget speech," he said.