New Delhi, June 23: Are you using debit and credit cards? Then here is a good news for you. Government of India has been planning to bring a law which will give Income Tax (IT) relief to those who use credit and debit cards while making payments.
According to sources, the Finance Ministry also proposed to make it mandatory to settle high value transactions of more than Rs 1 lakh through electronic mode, i.e. through debit and credit cards.
The ministry-led by Arun Jaitley has been planning to move towards cashless economy and reduce tax avoidance. The government also invited people across the country to comment on the proposed plan on its online platform mygov.in till June 29.
A statement on the website reads, "Tax benefits in terms of income tax rebates to be considered to consumers for paying a certain proportion of their expenditure through electronic means."
What if the proposals are accepted:
If the proposals, which are made by the finance ministry, would be accepted then it will help the government to keep a track on an individual's transactions history.
It will enable improved credit access and financial inclusion, reduce tax avoidance and check counterfeiting of currency.
In order to incentivise shopkeepers, the draft proposes a tax rebate to them provided they accept a significant value of sales through debit or credit cards.
"An appropriate tax rebate can be extended to a merchant if at least say 50 per cent value of the transactions is through electronic means. Alternatively, 1-2 per cent reduction in value added tax could be considered on all electronic transactions by the merchants,"
The draft makes a case for removing different types of fees and charges on e-transactions by various entities and providing incentives for such payments.
(With agency inputs)