Seeking to encourage digital payment, a Chief Ministers’ Panel headed by Chief Minister of Andhra Pradesh N Chandrababu Naidu has suggested for subsidy of Rs. 1000 to buy smartphone for non-tax assesses and small merchants. It has also advised for a cash transaction tax on withdrawals of Rs 50,000 and above.
Chandrababu Naidu also made a strong case of lower/zero merchant discount rate (MDR) for all digital payments to government entities. It has also suggested a cap on cash in all type of big ticket transactions.
The Chief Ministers’ Panel has Maharashtra CM Devendra Fadnavis and Madhya Pradesh CM Shivraj Singh Chouhan along with Andhra Pradesh CM N Chandrababu Naidu. The panel asked the Centre to promote Aadhaar Enabled Payment System (AEPS) by incentivizing and not charging MDR.
The panel also recommended tax incentives for micro ATMs, biometric sensors etc. and tax refund for consumers using digital payment up to a certain proportion of annual income.
The panel report also indicated that with the increase of volume of digital transitions, the cost will come down. It elaborated on the huge opportunity of non-cash payment transitions in India. It currently stands at non-banks per capita per annum at the level of 11 in India as compared to China’s 26, Singapore’ 728, Brazil’s 142 and Mexico’32.
It also suggested subsidization of Aadhaar Pay, Biometric (FP & Iris) sensors to all merchant points. It said that all payment banks and banking correspondents must use AEPS. Insurance for all digital transactions to safeguard the interest of people going cashless was also mentioned in the report.