No Cash Transaction above Rs 3 lakh - FM
Press Information Bureau
Government of India
Ministry of Finance
01-February-2017 13:57 IST
Budget gives a major push to Digital Economy; proposes No Cash Transaction above
Rs 3 lakh
Government to launch schemes to promote BHIM app, Aadhar Enabled Payment
System
Mission to be set-up to achieve a target of 2500 Cr digital transactions in 2017-
18
Series of measures proposed to strengthen and regulate digital economy
In
a bid to give a push to Digital Economy and weed-out corruption and
black money, the Union Minister for Finance and Corporate Affairs, Shri
Arun Jaitley in his Budget Speech today said that the Government has
decided that no transaction above Rs 3 lakh will be permitted in cash.
Accepting a suggestion by Special Investigation Team on Black Money to
ban cash transactions above Rs 3 lakhs, the Finance Minister has
proposed an amendment to the Income-tax Act in the Finance Bill.
Presenting
the General Budget 2017-18 in the Parliament, the Finance Minister said
that the Government will launch two new Schemes to promote the usage of
BHIM App i.e, Referral Bonus Scheme for individuals and a Cashback
Scheme for merchants. BHIM App was launched to promote digital
transactions and will unleash the power of mobile phones for digital
payments and financial inclusion, The Finance Minister Shri Jaitley
informed the House that 125 lakh people have adopted the BHIM app so
far.
The Finance Minister Shri Jaitley also announced that Aadhar
Pay, a merchant version of Aadhar Enabled Payment System, will be
launched shortly. This will be specifically beneficial for those who do
not have debit cards, mobile wallets and mobile phones. A Mission will
be set-up with a target of 2,500 crore digital transactions for 2017-18
through UPI, USSD, Aadhar Pay, IMPS and debit cards. Banks have targeted
to introduce additional 10 lakh new PoS terminals by March 2017. They
will be encouraged to introduce 20 lakh Aadhar based PoS by September
2017.
Highlighting the Government's strategy to clean the system
through digital economy, Shri Jaitley said that it has a transformative
impact in terms of greater formalisation of the economy and
mainstreaming of financial savings into the banking system. This, in
turn, is expected to energise private investment in the country through
lower cost of credit. India is now on the cusp of a massive digital
revolution, he added. The Finance Minister said that a shift to digital
payments has huge benefits for the common man. The earlier initiative of
the Government to promote financial inclusion and the JAM trinity were
important precursors to the current push for digital transactions, the
Finance Minister added.
In a bid to incentivize the digital
transactions, the Finance Minister Shri Jaitley proposed that the
presumptive income tax for small and medium tax payers whose turn-over
is up to Rs 2 crore will be reduced from the present 8% of their
turnover which is counted as presumptive income to 6% in respect of
turnover which is received by non-cash means. This benefit will be
applicable for transactions undertaken in the current year also, he
added.
The Finance Minister also proposed to limit the cash
expenditure allowable as deduction, both for revenue as well as capital
expenditure, up to Rs 10,000. Similarly, the limit of cash donation
which can be received by a Charitable Trust is being reduced from Rs
10,000/- to Rs 2000/-.
To promote cashless transactions, the
Finance Minister in the Budget has proposed to exempt BCD, Excise/CV
duty and SAD on miniaturised POS card reader for m-POS, micro ATM
standards version 1.5.1, Finger Print Readers/Scanners and Iris
Scanners. He also proposed to exempt parts and components for
manufacture of such devices, so as to encourage domestic manufacturing
of these devices.
To strengthen and regulate the digital economy,
the Finance Minister has proposed to create a Payments Regulatory Board
in the Reserve Bank of India(RBI) by replacing the existing Board for
Regulation and Supervision of Payment and Settlement Systems. The
Committee on Digital Payments constituted by the Department of Economic
Affairs has recommended structural reforms in the payment eco system,
including amendments to the Payment and Settlement Systems Act, 2007.
The Government will undertake a comprehensive review of this Act and
bring about appropriate amendments, Finance Minister added.
To
strengthen the digital payment infrastructure and grievance handling
mechanisms, the Finance Minister said in his Budget Speech that the
focus would be on rural and semi urban areas through Post Offices, Fair
Price Shops and Banking Correspondents. He added that steps would be
taken to promote and possibly mandate petrol pumps, fertilizer depots,
municipalities, Block offices, road transport offices, universities,
colleges, hospitals and other institutions to have facilities for
digital payments, including BHIM App. A proposal to mandate all the
Government receipts through digital means, beyond a prescribed limit, is
under consideration. The Government will strengthen the Financial
Inclusion Fund to augment resources for taking up these initiatives, the
Finance Minister added.
In his Budget Speech, the Finance
Minister informed that increased digital transactions will enable small
and micro enterprises to access formal credit. He said that the
Government will encourage
SIDBI to refinance credit institutions
which provide unsecured loans, at reasonable interest rates, to
borrowers based on their transaction history.
The Finance Minister
assured the House that the Government will consider and work with
various stakeholders for early implementation of the interim
recommendations of the Committee of Chief Ministers on digital
transactions.
Shri Jaitley said that the Government is considering
the option of amending the Negotiable Instruments Act to ensure that
the payees of dishonoured cheques are able to realise the payments.
