2 pct tax incentive on GST for digital payments; why Narendra Modi government must keep boosting cashless economy

By: |
Published: August 29, 2017 5:33:18 AM

GST incentives for digital payments a good move for curbing cash economy

tax incentive on GST, GST for digital payments,  Narendra Modi government, BHIM,  Lucky GrahakYojana, DigiDhanVyaparYojana, electronic transactions , gst paymentsThe government spent Rs 258 crore on the two schemes, Lucky GrahakYojana and DigiDhanVyaparYojana, launched to promote digital payments—16 lakh people received monetary prizes for adopting digital transactions. (Reuters)

Given the central government must continue with its efforts to promote digital payments—these recently tapered, after the demonetisation-jump—the proposal to give a 2% tax incentive on GST for digital payments of upto Rs 2,000 is smart thinking by the government. As per a Times of India report, the government is mulling over giving the incentive either as a cash-back or a discount; this can be a win-win for the government and the taxpayers as besides the monetary reward for reducing cash transactions, it will also likely push greater mapping of GST payment as a data repository of payments against which the incentive is claimed will also get created. Smaller transactions are large in number, and people prefer cash payments for these. By providing incentives for digital payments, a significant chunk of cash transactions should get discouraged.

The government spent Rs 258 crore on the two schemes, Lucky GrahakYojana and DigiDhanVyaparYojana, launched to promote digital payments—16 lakh people received monetary prizes for adopting digital transactions. The prime minister then announced in April that the government will spend Rs 495 crore for a period of six months on two new schemes to promote the government’s digital payments app, BHIM, cash back and referral bonus. The IT ministry’s efforts to promote electronic transactions through these moves will get a big boost if GST payments are also made part of the effort. There is no harm in the central government bearing the burden of such incentives as the benefits will be significant for the economy in the long run.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.