CMs Committee on Digital Payments recommend tax on cash withdrawal of Rs 50k and above

New Delhi, Jan 25 (KNN) If the recommendations of high-powered committee on digital payments are accepted, then withdrawal of Rs 50,000 cash and above might be taxed in order to discourage excessive use of cash.

The Chief Ministers Committee on Digital Payments led by the convener and Andhra Pradesh Chief Minister, Chandra Babu Naidu submitted the interim report on Digital Payments to the Prime Minister, Narendra Modi on Tuesday.

Chief Ministers of Madhya Pradesh, Maharashtra, Sikkim along with the Vice-Chairman of NITI Aayog Arvind Panagariya and CEO NITI Aayog Amitabh Kant were present on the occasion.

Chandra Babu Naidu shared the highlights of the recommendations in the interim report.

Some of the recommendations made by the panel include:

- Levy a banking transaction tax on cash transactions of Rs 50,000 and above to curb cash use

- A cap on maximum permissible limit of cash component in big transactions

- Provide a subsidy of Rs 1,000 to purchase smartphones to all non-income tax assessees or small merchants

- No retro tax on merchants doing digital transactions and relief from prospective taxes

- Tax refund for consumers using digital payments up to a certain proportion of their annual income

- All merchant points to be given 50% subsidy for purchasing Aadhaar-based payment methods

- No merchant discount rates (MDRs) on transactions done through Aadhaar-based payment systems

- Lowering of MDRs and making it zero for digital payments to government entities

- Major government functions such as public distribution systems should switch to digital payment modes

- Aadhaar should be made a mandatory ID for KYC, for which amendment to money- laundering law is required

- Tax incentives to be extended to Micro ATMs, Biometric Sensors etc. Domestic production to be encouraged

- AEPS to be promoted by incentivising & not charging MDR

- All government sections like insurance, educational institutes, fertilisers, PDS, Petroleum etc to switch to digital payments

- Lower / Zero MDR for all digital payments to Government entities