Budget 2017 may see measures encouraging a common man to walk on digital path
Preeti Sharma January 17, 2017
The Government of India aims to build a cashless economy wherein all the transactions are done electronically and can be tracked. The government has taken various short and medium-term measures to accelerate the adoption of digital payments such as Prime Minister's Jan-Dhan Yojana, Aadhaar and mobile connectivity.
Increased limit for Section 80TTA
The Government may increase the limit of Section 80 TTA exemption available for interest earned from Savings bank account in India for encouraging people to route the transactions through their savings bank accounts.
The Government may introduce lower tax rates, special exemptions for the small traders or businesses who accept payments through banking and digital means. Amendment of Section 44AD of IT Act for lower presumptive tax rate of 6 % versus 8% is a step in this direction. Under the existing provisions of section 44AD, in case of Individuals, HUF or partnership firms (other than LLP) carrying on any business and having a turnover of Rupees Two Crore or less, the profit is deemed to be 8% of the total turnover. In order to achieve the Government's mission of moving towards a less cash economy and to incentivise small traders / businesses to proactively accept payments by digital means, Government has decided to reduce the existing rate of deemed profit of 8% to 6% in respect of the amount of total turnover or gross receipts received through banking channel / digital means for the financial year 2016-17.
Tax disallowance for salary payment in cash
The Government can make it mandatory for all the enterprises including micro, small and medium firms to pay salaries electronically to all employees (including contract labour). Any deviation can lead to disallowance of part of such expenses for tax purposes.
Obligation to possess cash registers
The Government can mandate a wide group of businesses to use cash registers or related fiscal devices in order to record every individual transaction, regardless of the means of payment. The process of introducing cash registers, often described as the process of fiscalisation, is intended to provide a mechanism for the tax administration to supervise the records in cash turnover and to monitor and detect non-compliance.
In many countries, if the goods are purchased through a credit or a debit card, then the Government offers a reduction of certain percentage from the Value Added Tax to the consumer and the same abatement/ rebate is also further passed on to the merchants. The Government may provide such regime of a tax benefit replacing the current system where the banks are charging a surcharge and service fees. The Government should club this with its already planned move to offer discounts for payments done through credit and debit cards for general public utilities life fuel, toll payments, railway transports etc.
Given the current campaign to move India towards a cash less and digital economy along with the existing problems in the system in relation to cyber security and limited reach of the internet networks, the Government will need to come up with pretty lucrative schemes for encouraging every individual to contribute to this dream of digital India and also provide the relevant infrastructure for the same.
(Views expressed are personal)