Digital payment captains savour Modi Govt’s Budget
MUMBAI: 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 201718 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.