Give Rs 1,000 Subsidy To Buy Smartphones, Says Chief Ministers' Panel

The chief ministers' panel has called upon the central government to give subsidy of up to Rs 1,000 to buy smartphones to non-income tax assesses or small merchants in a measure to boost digital payments. The panel also called for tax relief for encouraging merchants to accept digital payments and a cash transaction tax on withdrawals of Rs 50,000 and above. The panel was headed by Andhra Pradesh chief minister N. Chandrababu Naidu and the report was submitted by him along with chief minister of Maharashtra, Devendra Fadnavis and chief minister of Sikkim, Pawan Kumar Chamling,

The chief ministers' panel report, which was submitted to Prime Minister Narendra Modi, on Tuesday, also made a case of lower or zero merchant discount rate (MDR) for all digital payments to government entities and cap on cash in all types of big ticket transactions.

The Merchant Discount Rate is charged to a merchant by a bank for providing debit and credit card services. The committee, also comprising Maharashtra Chief Minister Devendra Fadnavis and Madhya Pradesh Chief Minister Shivraj Singh Chouhan, also asked the centre to promote Aadhaar Enabled Payment System (AEPS).

The other recommendations include tax incentives for micro ATMs, biometric sensors etc. and tax refund for consumers using digital payment up to a certain proportion of annual income.

The panel said in its interim report that all payment banks and banking correspondents should be made interoperable through AEPS and also provide infrastructure for 1,54,000 post offices by way of interoperable Aadhaar enabled Micro-ATMs.

It also suggested that for Aadhaar Pay, Biometric (FP & Iris) sensors should be provided at 50 per cent subsidy to all merchant points.

The panel made a case for relief in prospective taxes for encouraging merchants to accept digital payments.

In a presentation, the report elaborated that with the increase of volume of digital transitions, the cost will reduce and there is huge opportunity in India because non-cash payment transitions by non-banks per capita per annum is 11 in the country as compared to 26 in China, 728 in Singapore, 355 in the UK, 142 in Brazil, 70 in South Africa and 32 in Mexico. 

Similarly, the report highlights that the number of (cashless) pay points per million people are 1,080 in India as against 31,096 in Singapore, 30,078 in the UK, 25,241 in Brazil, 7,267 in South Africa, 7,189 in Mexico and 16,602 in China.