Government may levy a charge on cash payments and cash deposits, and bring more cash transactions under the radar of PAN tracking.
The government is learnt to be considering taking steps to de-incentivise use of cash in the upcoming Union Budget 2017, including levying a charge on cash payments and cash deposits, and bringing more cash transaction under the radar of PAN (permanent account number) tracking, ET Now said on Thursday citing unidentified government sources.
The government may tighten the threshold for quoting PAN on cash transactions to Rs 30,000 from Rs 50,000. The threshold may be tightened for merchant transactions too, ET Now said.
Currently, cash deposits in banks up to Rs 50,000 are exempt from quoting PAN, while those above Rs 50,000 have to mandatorily furnish PAN card details.
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Further, the government may also announce levy of cash handling charges – money charged when making deposits, or making government service payments in cash above a certain number of currency notes, or above a certain amount. The would use the money thus collected to fund development of digital infrastructure in the country, the news channel said.
Prime Minister Narendra Modi and the government has been pushing for an increasingly cashless economy, with more and more digital transactions, following the surprise demonetisation of high-value currency notes on November 8.
It has ever since announced incentives on using digital wallets in forms of cash-back on making payments for various utilities such as petrol and daily dairy supplies.
Indian government has also built India Stack – a set of open APIs contributing towards a digital infrastructure to facilitate cashless and paperless delivery of services through electronic verification, data transfers, digital lockers and more. India stack has drawn praise as being a cutting-edge system from Microsoft’s Bill Gates and Google’s Sundar Pichai.
Earlier last month, a government panel had also recommended de-incentivising cash transactions, citing India’s cash-GDP ratio of 12% – the highest in the world. The panel sought to bring this ratio down to 6% in three years.
Use of digital wallets and payments banks has indeed surged in India, following demonetisation, which sucked out 86% of the currency from circulation, leaving people scrambling for cash to meet their daily needs.
Paytm – India’s largest mobile wallet by number of users – claims it has over 150 million e-wallet users. Telecom services giant Airtel, which launched a payments bank earlier this month, already enrolled over one million customers during the pilots. Airtel said it will have a network of 250,000 banking points through its retail stores across 29 states from day one – more than the total number of ATMs in the country.