By Prarthana Mitra
In a bid to strengthen and popularise digital transactions, the Modi government is cooking up a mega plan to incentivise consumers and business enterprises with price benefits, discounts, tax credit, and cash-back offers. Anonymous sources with knowledge of the development reportedly claim that a discussion about the new digitisation plan was held at the PMO’s office on Sunday.
Here’s what happened
According to the proposal, the revenue department plans to boost digital modes of payment by providing a discount of up to Rs 100 on the market price, to consumers using digital wallets, and online banking facilities to carry out their purchases.
Similarly, enterprises registering a large volume of revenue via digital means will receive cash-back commensurate to their turnover. Additionally, entrepreneurs and businessmen may also obtain indirect tax credits based on the quantum of digital payments they have encouraged through their trade. The direct tax department has also outlined several steps for encouraging small businesses to opt for the presumptive taxation scheme, by slashing the rate for calculation of deemed profit from 8% to 6%, based on the total turnover earned through digital means.
Concerns have been raised over the new initiative likely opening the national treasury up to a lot of fraudulent claims for tax benefits and cash-back, which the economy cannot really afford in the wake of the recent innumerable financial scams. However, the government claims it will have adequately stringent measures in place, to verify such claims. As a precautionary measure, the government will only credit the cash-back to a corporate bank account, after ascertaining the veracity of the digital transactions reported by the businesses, which will be required to produce gross receipts for online payments.
The plan is likely to be tabled before the GST Council, headed by Finance Minister Arun Jaitley on May 4, according to a source, who has also reported that Prime Minister Narendra Modi was privy to the development, the Business Standard reported.
Why you should care
According to the Business Standard’s report, the anonymous source claimed the revenue department has contemplated the option of cash-back to businesses, based on a threshold of digital transactions. This would likely make it easier to implement the new initiative, and would ensure that it is less vulnerable to misuse by unscrupulous elements. At the same time, this should also discourage cash dealings, and consolidate digital transactions as the primary mode of payment in the near future.
The drive to go cashless has already taken concrete shape in the west, and gathered steam in India for the first time when Modi announced demonetisation. Digital wallets like Paytm and Mobikwik have since given Indians a taste for instant payments, doing away with the hassle over exact denominations or delays caused by ATM machines.
This three-pronged approach to making digital transactions more lucrative among the Indian masses, will mark a high point for Modi’s vision of a completely digital economy, as and when it is successfully implemented. For those who are still sceptical about the currency of tomorrow, this mega plan may prove to be the right catalyst to ingratiate them into the cashless economy.