Lok Sabha Question No. 1376 (UNSTARRED), answered on 2020-02-10
Subject: Promotion of Digital Transactions
Ministry: FINANCE
Asked by: Pankaj Chowdhary

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS

## LOK SABHA UNSTARRED QUESTION NO. 1376

TO BE ANSWERED ON MONDAY, FEBRUARY 10, 2020 / MAGHA 21, 1941 (SAKA) PROMOTION OF DIGITAL TRANSACTIONS

## 1376: SHRI PANKAJ CHAUDHARY:

Will the Minister of FINANCE be pleased to state:

- (a)   whether the Government proposes to provide any incentive to promote digital transactions and if so, the details thereof;
- (b)        whether  the  extra  rate  of  interest  being  charged  by  the  banks  on  digital  transactions  is  causing adverse effect on it and if so, the details thereof;
- (c)          whether  the  Central  Board  for  Direct  Taxes  has  issued  circular  regarding  imposing  heavy  fine  of Rs.5000 per day on the shops or companies having revenue of 50 crore or more for not making available at least one digital payment mode and if so, the details thereof; and
- (d)       whether the Government proposes to review the rate of interest being charged by the banks on digital transactions and if so, the details thereof?

## ANSWER

## MINISTER OF STATE (FINANCE) (SHRI ANURAG SINGH THAKUR)

(a): A Statement indicating steps taken by the Government to incentivise digital payments is at Annexure.

(b) to (d): Section 269SU has been inserted in the Income Tax Act, 1961 vide the Finance Act, 2019 to provide that  every  person  carrying  out  business,  whose  total  sales,  turnover,  or  gross  receipts,  as  the  case  may  be exceeds fifty crore rupees during the immediately preceding year, shall provide facility for accepting payments through electronic modes prescribed vide Notification No.105/2019 dated 30.12.2019 of CBDT.    The Finance (No.2) Act, 2019 has also inserted section 271DB in the Act which provides for a levy of penalty of five thousand rupees per day in case of failure by a specified person to comply with the provisions of section 269SU.  However, the penalty will be levied w.e.f. 1 st February 2020 if the specified person fails to install and operationalize the facilities on or before 31.01.2020.

Further,  Section  10A  of  the  Payment  and  Settlement  Systems  Act,  2007,  inserted  vide  the  Finance  Act,  2019 provides  that  no  bank  or  system  provider  shall  impose  and  charge  on  a  payer,  or  a  beneficiary  receiving payment,  through  electronic  mode  prescribed  under  Section  269SU  of  the  Act.      Consequently,  any  charge including  the Merchant Discount Rate (MDR) shall not be applicable on or after January 1, 2020 on payment made through prescribed electronic modes.

On December 06, 2017, the Reserve Bank of India (RBI) had issued a circular on 'Rationalization of Merchant Discount  Rate  (MDR)  for  Debit  Card  Transactions',  whereby  the  maximum  permissible  MDR  for  both  'card present'  and  'card  not  present'  transactions  have  been  prescribed.  Further,  banks  have  also  been  advised therein  to  ensure  that  MDR  charges  for  debit  card  transactions  are  not  passed  on  to  the  customers  by  the merchants  on-boarded  by  them.      RBI  vide  circular  dated  June  11,2019  waived  processing  charges  and  time varying charges levied on Banks for outward transactions undertaken using RTGS/NEFT w.e.f. 01.07.2019 and advised banks to pass the benefit to their customers.

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## Annexure Statement referred to in reply to part (a) of Lok Sabha Unstarred Question No.1376 for 10.02.2020

## Measures to incentivize digital transactions

- A. In  Finance  Bill  2020,  the  threshold  limit  for  getting  accounts  audited  under  section  44AB  has  been increased  from existing  one  crore  rupees  to  five  crore  rupees,  if  during  the  previous  year  (a)  aggregate  of  all receipts in cash does not exceed 5% of such receipts and (b) aggregate of all payments in cash does not exceed 5% of such payments. B. Finance  Act,  2019  sections  13A,  40A,  43,  43Ca,  44Ad,  50C,  56,  80JJA,  269SS  &  269ST  of  Income  Tax amended to include such other electronic modes as may be prescribed in addition to existing permissible modes of payment like account payee cheque, account payee bank draft and electronic clearing system through bank account.  Notification No.08/2020 issued on 29.01.2020 inserted rule 6ABBA providing for inclusion of credit card, debit  card,  net  banking,  immediate  payment  service  (IMPS),  Unified  Payment  Interface  (UPI),  Real  Time  Gross Settlement (RTGS), National Electronic Transfer (NEFT), & Bharat Interface for Money (BHIM) Aadhaar Pay. Vide Finance Act, 2017, existing rate of deemed profit under section 44AD of the Act reduced from 8% to 6%  in  respect  of  total  turnover  or  gross  receipts  received  through  banking  channel/digital  means,  w.e.f.
- C. 01.04.2017.

## Measures to discourage cash transactions

- A. Finance (No.2) Act, 2019 inserted a new section 194N w.e.f. 01.09.2019 to provide for levy of TDS@2% on the  amount  of  cash  withdrawal  by  a  person  exceeding  Rs.1  crore  from  his  bank  account  subject  to  certain exemptions. B. Vide Finance Act, 2017 w.e.f. 01.04.2018, existing threshold of cash payment under section 40A(3) of the Act reduced from Rs.20,000 to Rs.10,000 in a single day. C. Vide Finance Act, 2017, new section 269ST inserted w.e.f. 01.04.2017 to prohibit cash receipt of Rs, two lakh or more by a person in a single transaction or in respect of transaction relating to one event or occasion. Section271DA inserted to provide for fine equal to the amount of such receipt in contravention of section 269ST. D. Vide  Finance  Act,  2017,  limit  of  cash  donation  to  a  charitable  organization  has  been  reduced  from Rs.10,000/- to Rs.2,000/- w.e.f. 01.04.2018. E. Provisions  of  section  13A  of  the  Act  has  been  amended  vide  Finance  Act,  2017  w.e.f.  01.04.2018 prescribing that donations of Rs.2000 or more are to be received by a political party only through account payee cheque drawn on a bank or an account payee bank draft or use of electronic clearing system through a bank account or through electoral bonds. Vide Finance Act, 2017 section 43(1) and section 35 AD of the Act amended w.e.f. 01.04.2018 to restrict
- F. the limit of capital expenditure in cash at Rs.10,000 for claiming depreciation or investment linked allowance.
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