Budget 2019: More Incentives For Businesses Embracing Digital Payments
In a bid to promote cashless transactions, the government said businesses with an annual turnover of over Rs 50 crore can offer low-cost digital modes of payments and no charges or merchant discount rate will be imposed on them or their customers.
Presenting the Union Budget 2019-20, she also said 2 percent tax deducted at source will be levied on cash withdrawals exceeding Rs 1 crore in a year from a bank account to discourage the practice of making business payments in cash.
The finance minister said the Reserve Bank of India and banks will absorb these costs from the savings that will accrue to them on account of handling less cash as people move to these digital modes of payment.
MDR is a charge levied for facilitating a digital transaction and is generally distributed among various parties.
“Necessary amendments are being made in the Income Tax Act and the Payments and Settlement Systems Act, 2007 to give effect to these provisions,” she noted.
Sitharaman said there are several low-cost digital modes of payment available such as BHIM UPI, UPI-QR Code, Aadhaar Pay, certain debit cards, NEFT and RTGS that can be used to promote a less-cash economy.
She added that the government has taken a number of initiatives in the recent past to encourage digital payments.
“To promote digital payments further, I propose to take a slew of measures. To discourage the practice of making business payments in cash, I propose to levy TDS of 2 percent on cash withdrawal exceeding Rs 1 crore in a year from a bank account,” she said.