1. Centre eyes income tax relief for credit, debit card payment: All you want to know in 5 points

Centre eyes income tax relief for credit, debit card payment: All you want to know in 5 points

Narendra Modi-led government has proposed income tax benefits for people making payments through credit or debit cards.

By: | New Delhi | Updated: June 24, 2015 9:18 PM
credit card, debit card

Central overnment has proposed income tax benefits for people making payments through credit or debit cards. (Reuters)

Narendra Modi-led government on Monday proposed income tax benefits for people making payments through credit cards, debits cards or via any other mode of online transaction. The initiative aims at building transaction history of an individual to enable improved credit access and financial inclusion, reduce tax avoidance and stop counterfeiting of currency.

The e-transactions, according to the draft, will include the ones made through debit/credit cards, mobile wallets, mobile apps, net banking, National Electronic Fund Transfer (NEFT), and other similar modes.

Cutting through the jargon, here is all you need to know in 5 points:

1) No transaction charges will be levied on purchase of petrol, gas and rail tickets with plastic money.

2) Mandatory to settle high value transactions of more than Rs 1 lakh through electronic mode.

3) Tax rebate to shopkeepers if they accept a significant value of sales through debit or credit cards. 1-2% reduction in VAT could be considered on all e-transactions.

Column: Curbing cash a better tool than black money compliance window

4) Utility service providers could be advised to give a discount to users for small ticket payments online like BSNL, which provides an incentive of 1% of the billed amount when payment is made online.

5) Government departments to adopt national E-payment gateway ‘PayGov India’ for collection of revenue, fee, penalties etc.

Read full story here: Govt proposes income tax benefits for credit, debit card payments

  1. A
    Akshay J
    Jun 23, 2015 at 6:43 pm
    Though its a good initiative, but to look at other side of the coin, the proposal is just a freebie to Direct Tax Payers. Not considering to revise the Tax bracket, is another delay. Not so strong proposal.
    1. B
      Jun 23, 2015 at 11:34 am
      Those who are dealing cash more than 100ks should indicate to government .
      1. M
        MANISH LAD
        Jun 23, 2015 at 5:54 pm
        Yes this is a very good idea. I feel that every transaction more than Rs. 5000/- should be mandatory by card. This way black money will be reduced. Initially it will look bersome to every one but over a time people will get used to it.
        1. Dr.T.V.Gopalakrishnan Krishnan
          Jun 23, 2015 at 12:56 pm
          This is a very good move. Many shops and service providers continue to insist on cash payments which needs to be stopped completely. Even in major cities and towns, houses , shops and business establishments are rented out and insistence of cash even if the amounts involved exceed lakhs are being reported. The interior decorators always insist on cash payments and the amounts always exceed lakhs of rupees. There should be a system for people to report such cash payments and details of service providers in secret. Earlier the cash system is replaced the better for the society and the people.
          1. g
            Jun 23, 2015 at 6:47 pm
            please bring this initiative fast. credit card companies looting 100's of rs every yr in the name of surcharges.
            1. J
              Jun 23, 2015 at 5:31 pm
              Long awaited step...
              1. K
                Jun 23, 2015 at 5:20 pm
                wrong heading. The heading should be "non-cash transactions", because, even payments made by Cheque, DD. Also, Android-Pay, Apple-Pay must be introduced, because, even small amounts like Rs 12/- Rs 27/- can be made electronically. No costs will be incurred like paper-printout, phone-bill will be incurred. Only few bytes of internet will be charged.
                1. Kaveripatnam Veerappan Venkatachalam
                  Jun 23, 2015 at 5:47 pm
                  Start it & Block Money will come to an End.
                  1. Thomas Allen
                    Jun 24, 2015 at 11:18 am
                    Nicely put.. Check this out. My friend makes around $88 per hour working on his PC. He left his job 6 months back but last month his income was $12k by just working on his computer for some hours daily. Visit this link
                    1. MADANLAL GOUTHAMCHAND
                      Jun 23, 2015 at 3:29 pm
                      Not all the cash held is unaccounted, next we Indians are very much used to pay and receive cash because otherwise you have to deposit cash into your bank account every now and then, hence once cash is paid the matter is over, this is not a socialistic economy that the government is controlling every thing, therefore you should never and cannot restrict the cash dealings
                      1. M
                        Mohammad Shujatullah
                        Jun 23, 2015 at 6:12 pm
                        The only way to curb black money and fake currency,Good initiative.
                        1. N
                          Jun 23, 2015 at 12:36 pm
                          A fabulous idea to reduce black money and also increase e-transactions. It's a win-win for everyone! Keep up the great work. Jai Hind!
                          1. P
                            Jun 23, 2015 at 5:02 pm
                            This is an excellent initiative by Government, and I fully support it. With the key objectives of a. Encouraging tax compliance with efficiency and simplicity, bringing in all stashed unaccounted money/ets (in any form) into legitimate mainstream economy; b. Discouraging tax evasion and generation of any additional unaccounted / black-money, and making black money (and illegally acquired Gold or other ets) absolutely worthless and impossible to utilize; c. Rewarding the legitimate wage earners / honest tax payers and penalize the evaders, directly and indirectly; I would like to make the following recommendations: 1. From 2016, transactions for the following should be permitted only via Credit/Debit cards or traceable electronic payments. This will minimize tax evasion, maximize efficiency and compliance and improve national security: a. Jewellery, Bullion, Forex purchases b. All transactions in Shopping Malls, Furniture Shops, Electronic shops, Garment shops, Gift shops c. Transactions in all air-conditioned shops and showrooms, or anything more than Rs. 1000 in others d. AC restaurants, Bars, all Wine and Liquor shops, all Hotels and Lodges, Spas, Beauty Parlours, e. All E-Commerce sites / companies f. Interior and exterior decorators, event / shamiyana organizers, indoor/outdoor caterers g. Fuel pumps for 4 wheelers (or all transactions above Rs. 200 for anyone) h. Real estate builders/developers, agents. i. Hospitals, Political Parties, NGOs, Charitable Trusts, Schools, Colleges, Tuition cles j. Airline tickets, Car Rental / Radio Taxis / Organized taxis k. Travel agents, Foreign SIM card providers, l. Automobile, accessories, spares, workshops Till then, cash transactions should be made very difficult, such as submission of doents, Aadhar and PAN copy, declaration of source of income and compliance to tax for every transaction, or 33% TDS / Withholding method. 2. Instead of proposed scheme of e-transaction upfront discount or tax incentive to merchant, which can potentially encourage Merchants to carry more cash transactions without recording then, Govt. should avoid differentiation in end-user pricing or tax collections at any point of . Further, differential treatment can cause issues in accounting. The solution: a. For Consumers: Govt. should introduce “cash-back / tax refund” on all e-transactions, on quarterly basis, partly/fully offsetting certain direct tax (say, 5% of Income Tax the user has already paid for) or indirect tax (e.g. Service Tax / VAT). This will effectively encourage tax compliance and discourage suppression of income and spending with hard cash. b. For Merchants: VAT credit (say 1.5%), only for e-transactions, credited on annual basis. No credit for cash transactions, this will encourage Merchant to move totally towards e-transactions sooner. Even with future GST, Govt should discourage offsets against cash transactions (are always questionable) 3. To minimize generation of black money and encourage e-transactions and small savings by farmers/household-workers/drivers/mechanics/micro-entrepreneurs etc., introduce cash-withdrawal / banking transaction tax of a. 3% for all cash withdrawals above Rs. 120,000 per year per person in 1st year b. 5% for all cash withdrawals above Rs. 100,000 per year per person in 2nd year c. 10% for all cash withdrawals above Rs. 90,000 per year per person in 3nd year 4. For Individuals: Make it illegal to possess more 5% of annual income (as per last tax returns) in cash in any currency or form. Upper limit Rs. 10 lakhs irrespective of income level. For establishments (say ceiling of 4 days of receipts in hard-cash or 7 days of cash pay-out liability as per last tax returns) in cash in any currency. 5. Abolish annual charges, service tax on Credit / Debit, interest, penalties etc. Also put a cap on interest charged by the Card issuers, say RBI repo rate 6%, reset every quarter to simplify comtions by issuers. And minimize transaction fees (say, 0.5% subject to a max of Rs. 10, for debit/credit cards of bank account holders with sufficient balance and bears no credit risk). 6. Instead of going after already overburdened ried cl for additional taxes, Govt should get the black money into tax net. Most black money is held either in the form of gold/silver/precious metals or stones, real-estate, hard cash / foreign exchange, expensive art, automobiles etc. many times in ficious names with Power of Attorney in the name of the dishonest Black Money owner, making it impossible to trace. 7. To tackle fraudulent and hidden investments in real-estate, other immovable as well as movable ets, automatic expiry of Power Of Attorney every 3 years, except for mortgages with recognized banks. Compulsory renewal and re-registration should be necessary, with appropriate declarations. 8. Also all transactions should be compulsorily through traceable electronic means, forcing the illegitimate owners to either convert their ets into traceable electronic form with declaration, or abandoning the black ets. In the present form, those should be made absolutely worthless. This will bring in much needed improved tax compliance, increased tax collections, transparency and discipline, and also reduce national threats.
                            1. P
                              Jun 24, 2015 at 3:52 pm
                              At last our finance minister sab come to know that by intraducing tax Benefits allowing transaction charges, through electronic Media can avoid our system of tax avoidence , in high value transactions through debit and credit cards and all so we can avoid fake currency transactions , in the country through usage of plastic cards will all so avoid number two business transactions manuplating commercial and income tax payments to govt, still we required to intraduce many more ideal system to deal our economy to reduce our Inflation in the country,
                              1. R
                                Jun 23, 2015 at 5:17 pm
                                Govt. should abolish individual income tax altogether and charge tax only at the point of consumption ie excise, s tax / GST, corporate tax, stamp duties, and other transactional taxes. This will encourage people from all over the world to come and "Make in India" - who does not want to live and work in a tax free area! All black money will automatically become white overnight and start flowing into the official GDP. All the harment that the common man faces at the hands of the corrupt income tax officials will also become a thing of the past. Its a win win decision that requires out of the box thinking and political will to implement. This one decision will change the face of our country in a decade. Lets do it Mr Finance Minister!
                                1. R
                                  Jun 23, 2015 at 5:10 pm
                                  1. M
                                    Jun 23, 2015 at 12:59 pm
                                    Very innovative idea and should be implemented quickly. Govt.also should think to commence Scheduled Bank for railways such as Bank of Railways so that bank facility will reach deep rural area by establishing branches in every rural railway station.
                                    1. Load More Comments

                                    Go to Top