New Delhi: The government has not taken any decision on levying a Banking Cash Transaction Tax (BCTT) on cash deals of Rs 50,000 and above as suggested by the high- powered Chief Ministers' panel, Economic Affairs Secretary Shaktikanta Das said Thursday.
"Some suggestions have come (on imposing tax on cash transactions)... The government has not taken any decision on the recommendation of Chief Ministers' panel. The government will go through the report very carefully and take appropriate decision," he said.
The Andhra Pradesh Chief Minister Chandrababu Naidu-headed committee on digitisation had in its report last month recommended a cap on cash in all types of big-ticket transactions and a levy on cash deals beyond Rs 50,000 as it sought to discourage the use of physical currency.
The Chief Ministers' Panel report, which was submitted to Prime Minister Narendra Modi on January 24, has also made a case of lower/zero merchant discount rate (MDR) for all digital payments to government entities and cap on cash in all type of big ticket transactions.
The 'Merchant Discount Rate' is charged to a merchant by a bank for providing debit and credit card services.
The committee comprising Maharashtra Chief Minister Devendra Fadnavis and Madhya Pradesh Chief Minister Shivraj Singh Chouhan has also asked the Centre to promote Aadhaar Enabled Payment System (AEPS) by incentivising and not charging MDR.
The other recommendations include tax incentives for micro ATMs, biometric sensors etc. and tax refund for consumers using digital payment up to a certain proportion of annual income.
Naidu also elaborated that with the increase of volume of digital transitions, the cost will reduce and there is huge opportunity in India because non-cash payment transitions by non-banks per capita per annum is 11 in the country as compared to 26 in China, 728 in Singapore, 355 in the UK, 142 in Brazil, 70 in South Africa and 32 in Mexico.
Similarly, the report highlights that the number of (cashless) pay points per million people are 1,080 in India as against 31,096 in Singapore, 30,078 in the UK, 25,241 in Brazil, 7,267 in South Africa, 7,189 in Mexico and 16,602 in China.
The panel made a case for relief in prospective taxes for encouraging merchants to accept digital payments and no retrospective taxation to Merchants doing digital transactions.
It also suggested that for Aadhaar Pay, Biometric (FP & Iris) sensors should be provided at 50 per cent subsidy to all merchant points.
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