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Unwilling to lose the momentum it gained for a less-cash economy after demonetisation and restrictions on cash withdrawals, the government may announce big disincentives in the upcoming Budget for usage of cash.
Sources revealed to ET Now that the upcoming budget could come up with a series of such big disincentives.
The government may reduce threshold for quoting PAN card for cash transactions, say sources.
The threshold, which is Rs 50,000 now, may be brought down to Rs 30,000 to bring more transactions within formal economy. Sources say the threshold for quoting PAN Card details for merchant transactions can also be reduced.
In addition to these steps, the government may also announce cash-handling charges for cash payments above a certain limit.
The move is part of the government's efforts to tighten the noose around people who deal in large cash transactions.
In fact, the threshold for quoting PAN Card details for merchant transactions could also be brought down from current Rs 2 lakh. With Aadhaar now having the government's legal backing, the usage for Aadhar card may also be made mandatory as an alternative for people not having PAN card.
In addition to these steps, the government may also announce cash-handling charges for cash payments above a certain limit.
Sources have told ET Now that a levy could be in the works for cash transactions over Rs 1 lakh.
"The scale of the implicit cost of transacting in cash is not fully understood. We are of the opinion that licencing authorities including government agencies should levy a cash handling charge for payments in cash above a certain threshold. The cash handling charge so collected should be exclusively used to fund new infrastructure for accpeting digital payments (like POS devices)," a source said.
The move is aimed at moving from a less-cash to a cashless society post the demonetisation drive that was brought into effect by PM Modi on November 8.
These measures will help the government stay on track towards a less-cash economy as there are concerns that easing of cash-withdrawal limits at banks and ATMs might take the economy back to pre-demonetisation prevalence of cash.
Also, these steps may seem necessary to promote a less-cash economy as digital payments cannot be encouraged through apps and PoS alone due to the poor state of infrastructure and lack of digital literacy in the country.
Sources revealed to ET Now that the upcoming budget could come up with a series of such big disincentives.
The government may reduce threshold for quoting PAN card for cash transactions, say sources.
The threshold, which is Rs 50,000 now, may be brought down to Rs 30,000 to bring more transactions within formal economy. Sources say the threshold for quoting PAN Card details for merchant transactions can also be reduced.
In addition to these steps, the government may also announce cash-handling charges for cash payments above a certain limit.
The move is part of the government's efforts to tighten the noose around people who deal in large cash transactions.
In fact, the threshold for quoting PAN Card details for merchant transactions could also be brought down from current Rs 2 lakh. With Aadhaar now having the government's legal backing, the usage for Aadhar card may also be made mandatory as an alternative for people not having PAN card.
In addition to these steps, the government may also announce cash-handling charges for cash payments above a certain limit.
Sources have told ET Now that a levy could be in the works for cash transactions over Rs 1 lakh.
"The scale of the implicit cost of transacting in cash is not fully understood. We are of the opinion that licencing authorities including government agencies should levy a cash handling charge for payments in cash above a certain threshold. The cash handling charge so collected should be exclusively used to fund new infrastructure for accpeting digital payments (like POS devices)," a source said.
The move is aimed at moving from a less-cash to a cashless society post the demonetisation drive that was brought into effect by PM Modi on November 8.
These measures will help the government stay on track towards a less-cash economy as there are concerns that easing of cash-withdrawal limits at banks and ATMs might take the economy back to pre-demonetisation prevalence of cash.
Also, these steps may seem necessary to promote a less-cash economy as digital payments cannot be encouraged through apps and PoS alone due to the poor state of infrastructure and lack of digital literacy in the country.
Source : The Economic Times
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