The government must tax cash withdrawals of Rs 50,000 and above from banks, abolish banks’ interest on credit card transactions, give tax refund to consumers on digital payments and extend Rs 1,000 subsidy on smart phones to promote a less-cash, digital economy, a panel of Chief Ministers has said in a report.
The panel led by Andhra Pradesh Chief Minister N Chandrababu Naidu said:
To curb use of cash for large transactions consider a levy of banking cash transaction tax on transactions of Rs 50,000 and above. Consider a cap on maximum allowable limit of cash in all types of large size transactions.
The interim report on promoting "Digital Payments" was submitted to Prime Minister Narendra Modi on Wednesday by Naidu and Chief Ministers of Madhya Pradesh Shivraj Singh Chouhan, Maharashtra Devendra Fadnavis and Sikkim Pawan Kumar Chamling.
Naidu later held a press conference to highlight the main points.
The report laid emphasis on the use of Aadhaar and said this unique identity number must be made the primary identity point for the "know your customer" (KYC) norms. It said the existing Aadhaar law can be applied towards this.
The report sought to point out how low in rankings India stood in terms of pay points for digital transactions (like swipe machines with merchants) – it is 1,080 per million people in India, 16,602 in China, 7,189 in Mexico, 25,241 in Brazil and 31,096 in Singapore.
“All government sections like insurance, educational institutes, fertilisers, public distribution system and petroleum must switch to digital payments,” it said. “Rural and urban cooperative banks should be on-boarded to digital transactions mode immediately.”
In terms of Unique Identity Number, the panel said all payment banks and correspondents, besides post offices, must be interlinked to the Aadhaar-enabled payments system.
As per the report, some of the constraints listed by the panel in the adoption of a digital economy includes attitudinal issues, hardware including payments acceptance infrastructure, data connectivity and cyber security. It said cash transactions were also cheaper than digital ones.
The high-powered panel was asked to suggest measures to enable all sections of the population to migrate to digital payments, and recommend measures to leapfrog to the advanced digital payment systems of global standards.
It was constituted on 30 November last year after the government demonetised Rs 500 and Rs 1,000 notes.
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