It pays to swipe the card: Govt

When asked if the government has any plans to push digital payments for funding of political parties, Jaitley said: “Can I tell you this would inevitably will be a future course. Well, I think when it becomes digital, if it becomes smaller donations, if it becomes lesser donations from a larger body of donors, it will be a great day for Indian democracy.”

“When I was repeatedly saying the cost of dealing in cash, are both to the economy and the political system, this was one of the factors I had in my mind. After all, internationally, if you see larger democracies, you have literally lakhs and millions of people donating small amounts online to political parties,” he added.

Under the scheme announced on Thursday, the Centre said it will provide 2 lakh Point of Sales (POS) terminals to villages free of cost, while it capped the monthly rental for such devices at Rs 100 per machine. Farmers holding nearly 4.32 Kisan Credit Cards will be provided Rupay Kisan Cards to enable them to make digital transactions.

Jaitley said the Central petroleum companies will give 0.75 per cent discount on sale price to consumers on purchase of petrol/diesel if payment is made through digital means. In November, digital payment for petrol and diesel has increased to 40% and the cash transaction of Rs 360 crore per day have got shifted to cashless transaction methods.

“The incentive scheme has the potential of shifting at least 30% more customer to digital means which will further reduce the cash requirement of nearly Rs 2 lakh crore per year at the petrol pumps,” he said.

To expand digital payment infrastructure in rural areas, the Centre will extend financial support to eligible banks for deployment of 2 POS devices each in 1 lakh villages with population of less than 10,000. These POS machines will be deployed at primary cooperative societies, milk societies and agricultural input dealers, benefitting nearly 75 crore people in these villages, he said.

The suburban railway network will give discount up to 0.5% to customers for monthly or seasonal tickets from January 1 on payments made through digital means. “Nearly 80 lakh passengers use seasonal or monthly ticket on suburban railways, largely in cash, spending worth nearly Rs 2,000 crore per year. As more and more passengers will shift to digital means the cash requirement may get reduced by Rs 1,000 crore per year in near future,” the finance minister said.

The government has decided that all railway passengers buying online ticket shall be given free accidental insurance cover of up to Rs 10 lakh.

Nearly 14 lakh railway passengers are buying tickets everyday out of which 58% tickets are bought online through digital means. It is expected that another 20% passengers may shift to digital payment methods of buying railway tickets. Hence nearly 11 lakh passengers per day will be covered under the accidental insurance scheme,” he said.

Railways will provide discount of 5 per cent for digital payments for catering services, accommodation and retiring rooms. Public sector insurance companies will provide incentive, by way of discount or credit, up to 10% of the premium in general insurance policies and 8% in new life policies of Life Insurance Corporation sold through the customer portals, in case payment is made through digital means, the minister said.

The government has exempted service on transaction charges for digital payments up to Rs 2000 per transaction. Jaitley said various government departments will share and bear the cost of these incentives. For the payment of toll at National Highways plazas using RFID card/fast Tags, a discount of 10% will be available to users in the year 2016-17.

The Centre announced these measures even as the deposits of old notes of Rs 500 and Rs 1000 in the banking system have swelled to Rs 11.85 lakh crore, amid expectations that most of the existing high-denomination currency will come back to the banking system.

“Merely depositing money in a bank account does not mean that it changes colour from black to white,” said Jaitley. “Its tax liability still remains because what is unexplained would still remain taxable, and therefore, what is deposited in the banks will be closely scrutinised to determine the tax liability on black money.” Revenue department officials will investigate this, he said.