Budget 2019: To promote cashless transactions, govt announces more incentives for businesses embracing digital payments

By: |
Updated: Jul 07, 2019 11:17 PM

Budget 2019 India: She added that the government has taken a number of initiatives in the recent past to encourage digital payments and less-cash economy. "

 Budget 2019, Union Budget 2019, India Budget 2019, India Budget 2019-20, Merchant Discount Rate (MDR) Budget 2019-20: MDR is a charge levied for facilitating a digital transaction and is generally distributed among various parties.

Union Budget 2019 India: In a bid to promote cashless transactions, the government Friday said businesses with annual turnover of over Rs 50 crore can offer low-cost digital modes of payments and no charges or Merchant Discount Rate (MDR) will be imposed on them or their customers. Presenting the Union Budget for 2019-20, Finance Minister Nirmala Sitharaman also said two per cent tax deducted at source (TDS) will be levied on cash withdrawals exceeding Rs 1 crore in a year from a bank account to discourage the practice of making business payments in cash. “…propose that the business establishments with annual turnover more than Rs 50 crore shall offer such low-cost digital modes of payment to their customers and no charges or MDR shall be imposed on customers as well as merchants,” she said.

The Finance Minister said the Reserve Bank of India (RBI) and banks will absorb these costs from the savings that will accrue to them on account of handling less cash as people move to these digital modes of payment.

Watch FE Explained video: What is Union Budget?

MDR is a charge levied for facilitating a digital transaction and is generally distributed among various parties. “Necessary amendments are being made in the Income Tax Act and the Payments and Settlement Systems Act, 2007 to give effect to these provisions,” she noted. Sitharaman said there are several low-cost digital modes of payment available such as BHIM UPI, UPI-QR Code, Aadhaar Pay, certain debit cards, NEFT and RTGS that can be used to promote less-cash economy.

She added that the government has taken a number of initiatives in the recent past to encourage digital payments and less-cash economy. “To promote digital payments further, I propose to take a slew of measures. To discourage the practice of making business payments in cash, I propose to levy TDS of 2 per cent on cash withdrawal exceeding Rs 1 crore in a year from a bank account,” she said.

Do you know What is Finance Bill, Short Term Capital Gains Tax, Fiscal Policy in India, Section 80C of Income Tax Act 1961, Expenditure Budget? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.