The promotion is intended to encourage digital transactions, as Minister Nirmala Sitharaman suggested using online payment methods such as OHIM, UPI, RTGS and NEFT.
New Delhi: To discourage cash transactions, the budget has proposed a 2 percent tax deduction at source (TDS) for cash transactions of more than Rs 1 crore from a single bank account in a financial year.
The promotion is intended to encourage digital transactions, as Minister Nirmala Sitharaman suggested using online payment methods such as OHIM, UPI, RTGS and NEFT. When Sitharaman presented her first budget on Friday, he said: "Companies with an annual turnover of Rs 50 crore should offer customers digital payment methods without additional costs or discounts from sellers, both customers and sellers."
"The Reserve Bank of India (RBI) and the government will cover the cost of savings accumulated through a decrease in cash transactions," she added.
Digital payments with mobile applications such as Paytm, Google Pay, PhonePe and MobiKwik have already risen in the past year, while UPI transactions in June 2019 stood at 754 million, while IMPS and NETC transactions amounted to 171 million and 26 million respectively.
Although online payments have risen, digital payment companies have long been demanding further tax incentives to promote a cash-free economy. Last month, a committee appointed by RBI to encourage online payments made proposals for the abolition of costs and 24-hour RTGS and NEFT facilities. The committee also recommends canceling the reimbursement for payments to public authorities.
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