Moneycontrol
Nov 09, 2016 10:23 PM IST | Source: Moneycontrol.com

After ban on notes, incentives for card payments coming soon

The abrupt ban on Rs 500 and Rs 1000 notes may have inconvenienced thousands, but the government is likely to follow it up with plans to support electronic transactions, including possible tax benefits for payments made through plastic money.

 
 
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Gaurav Choudhury
Moneycontrol


The abrupt ban on Rs 500 and Rs 1000 notes may have inconvenienced thousands, but the government is likely to follow it up with plans to support electronic transactions, including possible tax benefits for payments made through plastic money.

A government-appointed panel, set up in August, has been tasked to suggest ways such as tax rebates and cash back to incentivise card and digital transactions.

It is collating the comments that it had invited from stakeholders till October 10.

Some of these measures are likely to be announced in the budget for 2017-18 that will be presented early-February.

As reported by Moneycontrol last month, the government is also examining the feasibility to create a history for all card and digital payments.

Plans are also on to use the Aadhar data base for authenticating card/digital transactions and set up a centralised Know Your Customer (KYC) registry.

This is aimed at giving consumers instant, low-cost micro-credit by leveraging their credit history. This will create necessary linkages between payments transaction history and credit information.

The panel, headed by Ratan P Watal, Niti Aayog Principal Advisor and former finance secretary, is also studying changes that would be necessary in a string of legislations—the Payment and Settlement Systems Act, the RBI Act, and the Banking Regulation Act among others.

“Pay Gov India” will be turned into a single unified electronic gateway for public transactions central, state government and public sector undertakings.

Currently 64 departments and agencies are “live” on the Pay Gov India gateway under the oversight of National Payments Corporation of India (NPCI).

NPCI, set up in 2008, is an umbrella organisation for all retail payments system in India. NPCI's ten promoter banks include State Bank of India, Punjab National Bank, Canara Bank, Bank of Baroda, Union Bank of India, Bank of India, ICICI Bank, HDFC Bank, Citibank and HSBC.
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