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

Govt’s gamble on GST cuts: What do the bond and currency markets signal?

By
  It’s not just humans who suffer from cognitive biases; markets do too. Interestingly, different financial markets exhibit distinct biases, each interpreting events through its own prism of prejudice. Take the recent announcements on GST reforms: equity markets have chosen to view them through the lens of growth, while bond and currency markets are focusing on potential macroeconomic risks—fiscal pressures and current account challenges. So, which lens captures the true pulse?Equity markets may be right in expecting GST reforms to revive consumption, which has remained lacklustre for a while. But the key question remains—will this revival come at the cost of broader macro stability?It is well known that consumption stocks have rallied since the GST rationalisation announcement. But what about bond markets? What signals are they sending since this rejig was announced from the ramparts of the Red Fort?The signs aren't encouraging. Bond prices have slumped and yields have surged sinc...
Post a Comment
Read more

Luxury carmakers urge clarity on GST rates to boost festive season sales

By
  A clear picture regarding new GST rates at the earliest will help the overall auto industry, including the luxury car segment, to regain momentum in the ongoing quarter, which generally sees enhanced sales on account of the festive season.The high-powered GST Council, chaired by Finance Minister Nirmala Sitharaman, will meet on September 3-4 to discuss moving to a two-slab taxation.In an interaction with PTI, BMW Group India President and CEO Hardeep Singh Brar said the recent speculation about the change in GST rates has caused uncertainty in the minds of consumers.Consumer interest and demand is strong, but they (prospective buyers) have adopted a wait-and-watch approach, and this delayed decision-making is impacting new vehicle sales at a certain level, he noted."Expediting clarity on GST rates is essential to get back to speed and ensure the auto sector's contribution to economic growth during this quarter is robust," Brar stated.He also hoped that the sustainable p...
Post a Comment
Read more

Sebi proposes tighter norms for green bond third-party reviewers

By
  Sebi on Friday said it has proposed to tighten the norms to appoint independent third-party reviewers or certifiers for green debt securities to align them with requirements for other ESG-linked bonds.In a draft circular, Sebi said that the current norms for green bonds, introduced in February 2023, lack detailed requirements around reviewer independence, conflict of interest mitigation, and disclosure standards that are now in place for other ESG-linked securities under a June 2025 circular.The regulator's latest proposal seeks public comments on a revised framework that would bring parity by incorporating comprehensive criteria for third-party certifiers of green bonds on non-convertible securities.Under the proposed norms, issuers of green debt securities will need to appoint reviewers who are independent of their management, directors, and key managerial personnel. These reviewers will be remunerated in a way that prevents any conflicts of interest and possess relevant expert...
Post a Comment
Read more