The government on Thursday announced a slew of measures, including discounts on digital payments on purchase of petrol, railway ticket and insurance policies, to incentivise cashless payments. It also waived service tax for payments up to Rs 2,000 made through cards and decided to do away with transaction fee for payment to central government departments and PSUs. Prime Minister Narendra Modi too shared graphic details of the announcement highlighting the benefits of the new decision.
Addressing media on the one month anniversary of the demonetisation decision, Finance Minister Arun Jaitley announced that a discount of 0.75 per cent will be offered on purchase of petrol and diesel through either credit/debit cards, e-wallets and mobile wallets. Similarly, 10 per cent and 8 per cent discount will be offered in case of general and life insurance for buying new policy or paying premium online via PSUs websites.
Jaitley also announced that monthly and seasonal suburban railway tickets purchased through digital mode will get 0.5 per cent discount from January 1. Online booking of railway tickets will get up to Rs 10 lakh of free accidental insurance cover. Those using digital mode to pay for railway catering, accommodation, retiring room will be entitled to discount of 5 per cent.
The public sector banks have been advised that merchants should not be required to pay more than Rs 100 as monthly rental for PoS terminals/Micro ATMs/mobile POS so as to bring small merchants on board the digital payment ecosystem.
In order to expand digital payment infrastructure in rural areas, the government had directed NABARD to extend financial support to eligible banks for deployment of 2 POS devices each in 1 lakh villages with population of less than 10,000.
The finance minister said that as much as Rs 1,800 crore worth of petrol and diesel is bought every day by nearly 4.5 crore customers and just 20 per cent of it is through cards. The government, he said, is targeting at least 70 per cent of the daily sales to be through cards or e-wallets/mobile wallets to reduce cash exchange at petrol pumps by nearly Rs 2 lakh crore annually.
On government exempting card transactions below Rs 2,000 from service tax, he said, there will be a revenue implication as 70 per cent of the transaction currently are of less than that threshold.
The feedback from the industry is that the movement to the digital economy is “quite rapid,” Jaitley said, adding “this will certainly make India into a less cash economy.”
Rural Regional Banks and Cooperative Banks will issue ‘Rupay Kisan Cards’ to 4.32 crore Kisan credit card holders to enable them to make digital transactions at POS machines/Micro ATMs/ATMs.
Jaitley said 58 per cent out of the nearly 14 lakh railway tickets purchased everyday are bought online. The discount offered now is expected to add another 20 per cent passengers to digital payment methods. “Hence nearly 11 lakh passengers per day will be covered under the accidental insurance scheme,” he said.
Additionally, 5 per cent discount on payment through digital means would be given on paid services like catering, accommodation and retiring rooms.
Public sector insurance companies will provide incentive, by way of discount or credit, up to 10 per cent of the premium in general insurance policies and 8 per cent in new life policies of Life Insurance Corporation (LIC) sold through the customer portals, in case payment is made through digital means.
The Finance Minister said the central government departments and central PSUs will ensure that transactions fee/MDR charges associated with payment through digital mean shall not be passed on to the consumers and all such expenses shall be borne by them.
State governments are being advised that they and their organisations “should also consider to absorb the transaction fee/MDR charges related to digital payment to them and consumer should not be asked to bear it”, he said.
(With inputs from PTI)