Finance minister Nirmala announced a few measures to promote a less-cash economy and encourage digital payments in her maiden budget speech today, which has been one of the key election promises of the first Modi government.
To further the objective of ushering a less-cash economy, Sitharaman announced that the government will levy a 2 percent TDS (tax deducted at source) for any cash withdrawal exceeding Rs 1 crore in a year from a bank account.
She proposed that all business establishments with an annual turnover of over Rs 50 crore would offer low-cost digital modes of payments like BHIM UPI, UPI-QR Code, Aadhar pay, NEFT etc to their customers, and impose no charges or Merchant Discount Rates, on either customers or merchants.
RBI and banks would absorb these costs from the savings that would accrue to them on account of handling less cash, as people move to these digital modes of payment.
She said that the government has already undertaken some reforms to discourage use of cash, including prohibiting acceptance of cash payment of over Rs 20,000 for immovable property transactions, limiting threshold for cash donation to charitable trusts from Rs 10,000 to Rs 2,000 and setting a threshold of Rs 2,000 cr for acceptance of cash donation by political parties, among others.
First Published: Jul 5, 2019 2:57 PM IST
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