Budget 2018: Finance Minister Arun Jaitley will present the Union Budget on February 1. This budget is likely to address issues that industry and common man are facing. One such issue is tax rate for transactions done through mode other cash. In case of presumptive taxation regime under section 44AD of the Act it has been provided that lower rate of 6% would apply instead of 8% for receipts through account payee cheque drawn on bank or account payee draft or use of electronic clearing system through a bank account, according to reports. However, there are certain digital modes of payment like mobile wallets, credit cards etc., which may still be not covered within the scope of the defined mode of payment as they only cover transactions done by electronic clearing system through a bank account. Notably, this will be the last full-fledged budget by the Modi government before the 2019 Lok Sabha election. The budget comes at a time when country’s economy is going through a transitional phase following implementation of Goods and Services Tax (GST) and Demonetisation.
With Prime Minister Narendra Modi himself pushing for cashless economy and digital payments, the government should look into this, says FICCI. “In all the sections introduced to promote digital economy, the mode of payment should be defined in such a manner that all non-cash transactions done through traceable mode should be covered within the ambit. It is further suggested that benefit of lower rate of tax @ 6%, should also be extended for presumptive tax under section 44ADA (presumptive tax for professionals) and 44AE (presumptive tax for truck owners),” the FICCI has said.
The digital payments had surged following PM Modi’s much-debated demonetisation move on November 8, 2016. The government has come up with UPI or Unified Payments Interface (UPI). UPI is a system that powers multiple bank accounts into a single mobile application for seamless fund routing and merchant payments into one hood. Transactions through IMPS or Immediate Payment Service, which is an electronic fund transfer service, almost doubled to 2.2 million from 1.2 million during the period under purview, according to the data shared by government officials.
Even FM Jaitley had said that excessive cash in the economy has “its own cost” and India is gradually moving towards digital transactions. Following that, the Centre has been pushing for digital payments and transactions through the banking channel so as to promote a ‘less-cash’ economy. “Excessive dependence on cash has its own cost. “It is not just cost but there is a curse of cash. It has an impact on both society and economy,” FM Jaitley had said.