Skip to main content

Tax sops for e payments run into road blocks

By
The proposal to provide income tax relief for usage of debit and credit cards has run into opposition -- within the government.
According to sources, the revenue department has flagged a host of concerns, and expressed reservations on the draft proposal of the department of economic affairs (DEA) to promote electronic payments. The two departments are likely to engage in a series of detailed discussions to sort out these issues.
Tax benefits, lower transaction fees for electronic payments and a nominal charge on high-value cash transactions are among likely steps that the government plans to implement to become a cashless economy.
The government had on June 22 released draft proposals to encourage electronic transactions in a bid to curb generation and circulation of black money. The draft proposes a mix of steps to increase debit and credit card usage, mobile payments and other forms of electronic transactions. “The goal of the proposed policy is to provide necessary incentives to use e-transactions to replace the use of cash — either in government transactions, or in regular commerce over a period of time through policy intervention,” according to the draft proposals.
The revenue department feels that if the draft proposals are implemented in their present form, it would not be sufficient to fulfill the objective of discouraging the use of cash and cracking down on the illegal economy, sources told HT.
Sources said the department also feels giving tax rebates to consumers for making e-payments might impact revenue collections, already hit by the economic slowdown.
At Rs 6,96,200 crore, direct tax collections during 2014-15 were only marginally short of the government target. The government had revised down the direct tax collection target to Rs 7,05,000 crore for 2014-15 against the initial projection of Rs 7,36,000 crore in view of sluggish growth.
Other key issues flagged by the revenue department include: difficulty in implementing the proposal, need to introduce a regulatory framework, impact on revenues due to tax breaks.
“To cover the entire country in this way would be difficult,” the source said. “The penetration of electronic mode for transactions is not to the extent it is required, secondly, doing away with transaction charges on card payments at petrol pumps, gas agencies and railway tickets is also something which needs to be considered in detail. A lot of stakeholders are involved in this, who are in return giving service tax which is levied on such services,” the source said.
The revenue department has also requested the DEA to give clarity on tax relief it wants to give, and the impact of these on revenue collections.
To the point of a possible 1-2% reduction in value-added tax (VAT) for electronic transactions by merchants, the department felt it involves states as well, and their collection of VAT would also be impacted.
Hindustan Times, New Delhi, 20th July 2015

Comments

Post a Comment

Popular posts from this blog

Household debt up, but India still lags emerging-market economies: RBI

By
  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...
Post a Comment
Read more

External spillovers likely to hit India's financial system: RBI report

By
  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...
Post a Comment
Read more

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

By
  New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...
Post a Comment
Read more