NEW DELHI: Days before the Budget, a panel of chief ministers has recommended a ban on cash transactions beyond a threshold and a tax on payments beyond Rs 50,000 as it sought to discourage the use of physical currency while suggesting a host of incentives for payments by card and other digital means.
In its interim report submitted to PM Narendra Modi on Tuesday, the committee led by Andhra CM N Chandrababu Naidu suggested a host of tools, including a subsidy of up to Rs 1,000 for smartphones purchased by those who do not pay income tax as well as small merchants in addition to lowering or doing away with the merchant discount rate or the fee paid on card and online transactions.
Naidu said he was “very confident” that some of the recommendations would be incorporated in the Budget, due to be presented on February 1.
Some proposals related to disincentivising cash may find traction as the Supreme Court-appointed SIT on black money, too, had suggested a cap on cash transactions as well as a limit on how much an entity could hold in physical form. Although the proposal to levy a cash transaction tax has found support, a section within the government is not in favour of this as it believes incentives will yield better results.
