Lok Sabha Question No. 2148 (UNSTARRED), answered on 2021-03-08
Subject: Less-Cash Economy
Ministry: FINANCE
Asked by: Ramya  Haridas

## 2148:   MS. RAMYA HARIDAS

Will the Minister of FINANCE be pleased to state:

- a. the  details  of  steps  taken  by  the  Government  to  ensure  a  transition  towards  a  less-cash economy;
- b. whether  the  Government  is  in  the  favour  of  allowing  minimum  KYC  wallets  for  low  value transactions to ensure ease of moving towards less-cash economy; and
- c. if so, the details thereof and if not, the reasons therefor?

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

(a) : A  Statement  indicating  steps  taken  by  the  Government  to  promote  digital  payment ecosystem  in  India,  discouraging  cash  transactions  and  encouraging  digital  transactions  is  at Annexure-I.

(b) & (c): To give impetus to small value digital payments and for enhanced user experience, RBI introduced a new  type of semi-closed Prepaid Payment Instrument (PPI), vide Circular No.DPSS.CO.PD.No.1198/02.14.006/2019-20 dated 24.12.2019, which can be issued by bank and non-bank PPI issuers after obtaining minimum details of PPI holder. RBI's step towards introducing minimum KYC wallets is an eminent step towards less cash economy.

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

## LOK SABHA UNSTARRED QUESTION NO. 2148

TO BE ANSWERED ON MONDAY, MARCH 8, 2021 / PHALGUNA 17, 1942 (SAKA)

## 'LESS-CASH ECONOMY'

## Annexure-I

## Statement referred to in reply to part (a) of LSUSQ  2148 for answer on 8.3.2021.

A. Promotion of digital  payments  is  an  essential  aspect  of  Digital  India  programme.  DIGIDHAN Mission was set up at MeitY in June 2017, which has been primary catalyst to promote the digital payment  ecosystem  in  India.  Under  the  Mission  following  steps  were  taken  to  promote  digital payments:

- 1) Incentive schemes: Government has launched various schemes for incentivizing merchants, individuals  and  banks  like    BHIM  Cashback  schemes  for  Individuals  &  Merchants,  BHIM Aadhaar Merchant Incentive Scheme, BHIM-UPI Merchant On-boarding Scheme and MDR Reimbursement Scheme.
- 2) Digital  Payments  Dashboard: DIGIDHAN  Dashboard  (https://digipay.gov.in)  has  been developed to create a platform for reporting, monitoring and analysis of digital payments transactions occurring in the country and enablement of infrastructure through deployment of Physical/Mobile/BHIM Aadhaar PoS devices.
- 3) On-boarding of  Billers  on  Bharat  Bill  Payment  System  (BBPS) :    BBPS  is  one  of  the  main focus areas of the Government  providing an interoperable and easily accessible recurring and bill payment service to consumers via multiple channels like Internet Banking, Mobile Banking, Mobile Apps, UPI, etc., and major billers (Electricity, DTH, Gas, etc.) have been onboarded on BBPS.
- 4) National Common Mobility Card (NCMC): Government has launched NCMC to provide an easy, convenient and fast method of digital payment to the citizens for public transport and other  low  value  transactions  including  retail,  parking  etc.  NCMC  will  enable  a  single interoperable digital payment mode in all the Metros and Bus services along with retail to fulfill the vision of 'One Nation One Card'.
- 5) Campaigns  to  Promote  Digital  Payments: Several  initiatives  have  been  undertaken  to promote digital payments in the country. Few of digital payments literacy and promotion campaign undertaken are :-
6. ­ Smart  City  Campaign to  promote  digital  payments  in  100  smart  cities  from  1 st July, 2018 to 31 st October, 2018.
7. ­ Data  Security  Council  of  India (DSCI),  Government  of  India  and  Google  India  joined hands  for  'Digital  Payment  Abhiyan'  creating  awareness  &  best  practices  videos  & brochures  in  07  different  languages  to  spread  awareness  and  build  trust  in  digital payments among common man.
8. ­ MeitY  Awards: In  2019,  MeitY  awarded  Fintech  companies  (6  Nos.)  for  bringing  in innovation in digital payments domain. Banks (12 Nos.) were also awarded based on their performance in pre-defined Key Performance Indicators (KPIs) to encourage and recognize their efforts.
9. ­ Workshops: , Promotional workshops on digital payments in all the capitals of the North East States have been organized by MeitY through NIELIT in 2019.
- 6) Promotion of indigenous payment solutions BHIM-UPI & RuPay globally: India's indigenously developed BHIM-UPI and RuPay cards are world class platforms for enabling digital  payments.  Several  countries  in  Asia,  Africa  and  the  Middle  East  have  displayed  an inclination  towards  establishing  a  'real  time  payment  system'  or  'domestic  card  scheme' and wish to replicate our model in their country. Government is making efforts to promote these products globally.
- 7) Security  Measures  for  Digital  Payments :  While  the  customers  are  rapidly  shifting  to  the non-cash modes of payments, at the same time, number of frauds in digital transactions are also increasing. Various measures  have  been  taken  to  ensure  increased  efficiency, uninterrupted availability of safe, secure, accessible and affordable payment systems.
- 8) Grievance  Redressal  System :  A  strong  grievance  redressal  mechanism  is  essential  to increase  trust  of  customers  in  digital  payments.  MeitY  has  integrated  Digital  Payment Grievances  along  with  Ministry  of  Consumer  Affairs  (MoCA)  for  utilizing  it  with  National Consumer Helpline (NCH) platform of Department of Consumer Affairs (DoCA).

## B. Measures to discourage cash transactions

- (a) Section 194 N inserted to the Income Tax Act vide Finance Act (No. 2) of 2019 provides for deduction of tax on payment by a banking company or co-operative society engaged in the business of banking or post office @ 2% on the sum exceeding Rs. 1 crore in aggregate from one  or  more  account  maintained  by  the  recipient.    For  taxpayers  who  have  not  filed  their income  tax  returns  for  past  three  years,  Finance  Act  2020  provided  a  TDS  @  2%  for withdrawing  cash  in  excess  of  Rs  20  lakh  and  up  to  Rs.  1  crore    and  TDS  5%  in  case  of withdrawls exceeding Rs. 1 crore.
- (b) With effect from 01.04.2018, any payment in cash above Rs 10,000/- to a person in a day is not  allowed  as  deduction  in  computation  of  income  from  'Profit  and  Gains  of  business  or profession' as per sub-section (3) of section 40 A of the Income Tax Act.
- (c) Section  269ST  inserted  to  prohibit  cash  receipt  of  rupees  two  lakh  or  more  by  a  person  in respect of a single transaction or in respect of transaction relating to one event or occasion, with   effect from 01.04.2017. Section 271 DA was inserted to provide for a penalty equal to the amount of such receipt in contravention of section 269ST.
- (d) Section 269SS prohibits a taxpayer from taking or accepting loans or deposits of more than Rs.20,000/- in cash.  Section 269T prohibits a taxpayer from repayment of loans or deposits of more  than  Rs.20,000/-  in  cash.    These  section  payments/advance  in  relation  to  transfer  of immovable property.
- (e) Limit of cash donations to charitable organizations has been reduced from Rs.10,000/- to Rs. 2000/- w.e.f. 01.04.2018 vide Finance Act, 2017.    Further, section 13 A has been amended to provide all donations of Rs.2000 and above to political parties be made through account payee cheque or bank draft or electronic clearing system or electoral bonds.
- (f) Sections 43(1) and 35AD amended vide Finance Act, 2017 w.e.f. 01.04.2018, to restrict limit of capital  expenditure  in  cash  at  Rs.10,000/-  for  claiming  depreciation  or  investment  linked allowance.

## C. Measures to incentivize digital transactions

- (a) Vide Finance Act, 2020, the monetary threshold of getting books of account of MSMEs audited under section 44AB of Income Tax Act was increased from Rs. One crore to Rs. Five crore if the total  sales  or  receipts  by  cash  during the  financial  year  is  less  than  5% of total  receipts  and total  purchases  of  payments  in  cash  during  the  financial  year  is  less  than  5%  of  the  total payments.
- (b) Vide  Finance  Act,  2019  section  269SU  was  inserted  to  provide  that  w.e.f.  01.11.2019  every person carrying on business shall provide facility for accepting payment through the prescribed electronic  modes  in  addition  to  the  facility  for  other  electronic  modes  of  payment  being provided by such person, if his total sales, turnover or gross receipts in business exceeds Fifty crore rupees during the immediately preceding previous years.
- (c) Vide Notification No.8/2020 dated 29 th January, 2020, Rule 6ABBA was inserted to prescribe other electronic mode of payment like credit cards, debit cards, net banking, UPI, RTGS, NEFT, IMPS  and  BHIM  Aadhar  Pay  for  carrying  out  of  transactions,  apart  from  account  payee cheque/bank draft.
- (d) Vide Finance Act, 2017, w.e.f. 01.04.2017, the existing rate of deemed profit under section 44 AD of the Act has been reduced from 8% to 6% in respect of the amount of total turnover or gross receipts received through banking channel/digital means.

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