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Budget 2018: Govt may announce incentives to promote digital transactions

The government's push for cash-less economy started with the announcement of the demonetisation on November 8, 2016.

twitter-logo BusinessToday.in        Last Updated: January 22, 2018  | 12:05 IST
Budget 2018: Govt may announce incentives to promote digital transactions

The government will present its last full budget on February 1. While one can just speculate on what Finance Minister Arun Jaitley may offer in this year's budget, some reports suggest that he could bring down charges on digital transactions to promote cash-less economy. The government's push for cash-less economy started with the announcement of the demonetisation on November 8, 2016. Prime Minister Narendra Modi's sudden move had squeezed the cash supply in the economy, therefore forcing people to go digital.

However, people feared that multiple transactions could cost them more as banks and other financial institutions levy a fee after certain free transactions. Acting on these concerns, the government asked the banks to waive-off the charges. It had also asked IRCTC to remove service charge on online ticket bookings. They all did that but for few months. Banks later capped the number of free transactions one can make in a month. To ensure that such moves don't deter people from using electronic payments, the government can announce incentives for consumers to promote digital transactions.

It has been reported that in rural areas small and medium scale traders avoid digital payments for the want of point of sale (POS) machines and are still heavily dependent on cash. The government could provide tax relief on purchase of POS machines. For retail consumers, the Finance Minister may also announce incentives on transactions made through state-run BHIM and UPI applications. He can also increase referral bonus on BHIM and UPI apps.

Last year in July, banks and the National Payments Corporation of India asked the Finance Ministry to increase the referral bonus on these payments apps. Currently, any person who refers BHIM to another gets Rs 10 as an incentive, however, NPCI wanted the referral bonus to be increased to Rs 25. The government may take call in the upcoming budget.
           
The government can also waive-off charges on online ticket bookings.    

 

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