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Card payments may be better after all! Could help you save tax

At present, only 10% of total transactions in India happen through the electronic mode, which is very low compared to other nations.

June 24, 2015 9:33 IST | India Infoline News Service
Should the government go ahead with its draft proposal, both Indians merchants and consumers would soon be able to avail tax benefits on the debit and credit card payments. The proposal aims to encourage cashless transactions, a key step to check the black money menace. At present, only 10% of total transactions in India happen through the electronic mode, which is very low compared to other nations.

Here’re the likely decisions under the said proposal:
  • Abolishment of transaction charges on debit card payments at gas stations or railway tickets
  • A one per cent discount on electronic settlement of telephone and electricity bills
  • Income tax rebates to consumers making debit or credit card payments, subject to ceiling
  • Raise the ceiling for high-value transactions from Rs 2 lakh to Rs 5 lakh
  • Redressal mechanism for prompt resolution of disputed and suspect transactions through electronic mode. On reporting of such transactions, money would be credited back to the complainant’s account and blocked till redressal
  • Transaction fee for cash transactions above specified limit to discourage merchants and consumers preferring cash for ulterior motives
  • Tax benefits – 1 to 2 per cent on VAT - to merchants accepting electronic payments 

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