Sitharaman added that business establishments with an annual turnover of Rs 50 crore would have to provide digital payment modes to customers at no extra charges or merchant discounts, on either customers or merchants.
Finance Minister Nirmala Sitharaman in her Budget 2019 speech on July 5 announced that 2 percent tax deducted at source (TDS) would be levied on cash withdrawal exceeding Rs 1 crore for a year from a bank account.
The move is aimed at promoting digital payments and discouraging cash transactions.
Sitharaman said alternatives such as BHIM, UPI, digital payment modes, NEFT and RTGS could be used to promote a cashless economy.
Sitharaman added, "Business establishments with an annual turnover of Rs 50 crore would have to provide digital payment modes to customers at no extra charges or merchant discounts, on either customers or merchants."
The finance minister said further: "The Reserve Bank of India (RBI) and the government will cover the costs from savings accrued via a decrease in cash transaction operations."
Digital payments firms had long been demanding government incentives in the form of tax benefits.
Earlier this year, according to a survey by LocalCircles, a community media platform, over 26 percent respondents felt that priority sector status is important and should be accorded to small and medium enterprises for lending. Nine percent said corporate income taxes should be reduced.
Lately, digital transactions using mobile payment firms such as Paytm, MobiKwik, Google Pay, PhonePe and the like using Unified Payments Interface are on the rise. For instance, UPI transactions have grown to 754 million in June 2019.
IMPS and NETC transactions stood at around 171 million and 26 million, respectively.
In order to encourage digital payments, last month, a committee set up under Nandan Nilekani also suggested elimination of charges, round the clock RTGS and NEFT facility and duty-free import of point of sale machines.
The committee was appointed by the RBI.Among other things, the panel has suggested that there should be no convenience fee on payments made to government agencies by customers and recommended that payment systems use machine-driven, online dispute resolution systems to handle complaints.Are you happy with your current monthly income? Do you know you can double it without working extra hours or asking for a raise? Rahul Shah, one of the India's leading expert on wealth building, has created a strategy which makes it possible... in just a short few years. You can know his secrets in his FREE video series airing between 12th to 17th December. You can reserve your free seat here.