Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: empanelment :: cpt :: ACCOUNTING STANDARD :: form 3cd :: TAX RATES - GOODS TAXABLE @ 4% :: ACCOUNTING STANDARDS :: list of goods taxed at 4% :: Central Excise rule to resale the machines to a new company :: TDS :: articles on VAT and GST in India :: due date for vat payment :: ARTICLES ON INPUT TAX CREDIT IN VAT :: VAT RATES :: VAT Audit :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes
General »
 Tax and the dilemma of the self-employed
 Banks warn share tax hike threatens Paris' post-Brexit appeal
 PMC may decide on property tax rebate for IT firms this week
 I-T Dept is giving out certificates of appreciation. Have you received yours?
 Government works on ironing out benefits refund mechanism for exportersa
  Tax officials are using an IDS provision to question transactions beyond six-year-limit
 Tax-free bonds rally like midcap funds
 Senior citizens do not have to pay advance tax on salary and interest income
 GST: Audit commissioners to get adjudication powers
 Interest on NRE rupee account can be exempt from tax under FEMA
 Impact of GST on Real Estate Sector

Govt removes surcharge and service tax on digital payments to boost adoption
February, 27th 2016

In a bid to increase the adoption of digital payments in the country, the Union cabinet has decided to remove surcharge and service tax on digital payments, the government said in a release. Primarily, the move is done to curb the usage of cash and the government will announce a number of short term (within a year) and medium term (withing two years) measures which will be implemented by the government ministries, departments and organisations.

Currently, service charge is currently levied by payment gateways and paid to the government. The vendor using a payment gateway also pays a convenience charge. On credit cards, it is 1-2.5%, according to this Business Standard report.


“Promotion of payments through cards and digital means will be instrumental in reducing tax avoidance,” the government said in its release

The finance ministry had in July 2015 had considered tax rebates for card payments and at the time had suggested the rationalisation of the Merchant Discount Rate (MDR), which at present is 0.75% on Debit Card transactions of up to Rs 2,000 and 1% on all transactions above it. An MDR is an interchange fee which is paid to the bank that issued the credit card that was used in each transaction.

The ministry also mulled income tax rebates for consumers who pay a certain proportion of their expenditure and bills through electronic means. The government also proposed levying of a nominal cash handling charge on transactions greater than a specified level.

At the time, to enhance adoption of mobile banking, the finance ministry also said Unstructured Supplementary Service Data (USSD) charges could be examined and rationalized. Currently, the telecom companies are charging a USSD charge of Rs. 1.50 per transaction for mobile banking/payments.

MediaNama’s take

The government’s moves for increasing digital adoption are welcome. The most significant changes would be the rationalization of the Merchant Discount Rate. Many small scale establishments and shops are reluctant to accept card payments because of the number of charges payment gateways and banks levy on them. The key for increasing digital payments in India will be merchant adoption.

As we’ve pointed out earlier, an Ernst and Young report said that the country has the lowest POS terminal penetration in the world. The report further adds that there are only 693 machines per million of India’s population, compared to similar emerging countries such as Brazil, which has 32,995 terminals per million people and China and Russia, each of which has around 4000 terminals per million people.

RBI’s latest data shows that there are 12,69,871 POS terminals in the country. Compare that to 2,24,75,500 credit cards and 62,46,26,392 debit cards in circulation.

A good thumb rule for adoption would be to see if restaurants in Kolkata would start accepting card payments.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Our Mission

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions