11 sops for e-payments

​New Delhi: Petrol, railway tickets and insurance policies of PSU companies will cost less if bought through debit/ credit cards or other digital modes, the government said on Thursday while announcing a slew of measures to incentivise cashless payments.

It also waived service tax for payments up to Rs 2,000 made through cards and decided to do away with transaction fee for payment to central government departments and PSUs.

Finance Minister Arun Jaitley announced that a discount of 0.75 per cent will be offered on purchase of petrol and diesel through either credit/ debit cards, e-wallets and mobile wallets.

This would translate into a discount of 49 paise per litre of petrol that is currently sold at Rs 66.10 in Delhi. Similarly on diesel, it would mean a saving of 41 paise on every litre bought at Rs 54.57.

Similarly, 10 per cent and 8 per cent discount will be offered in case of general and life insurance for buying new policy or paying premium online via PSUs websites.

Announcing 11 decisions to promote digital transactions, Jaitley said that monthly and seasonal suburban railway tickets purchased through digital mode will get 0.5 per cent discount from January 1.

Online booking of railway tickets will get up to Rs 10 lakh of free accidental insurance cover. Those using digital mode to pay for railway catering, accommodation, retiring room will be entitled to discount of 5 per cent.

The minister further said 10 per cent discount will be available on use of digital mode for paying for RFID or fast-tags for highway toll.

The cost of these discounts, Jaitley said, "will be borne by each of the organisation because most of these discounts are offered by the bodies which are run by central government or are PSU units".

The move follows a month after government demonetised Rs 500 and Rs 1,000 notes to check black money, leading to a severe cash crunch in the system.

Against this backdrop, it is also aggressively promoting digital mode of payments to ensure that the economy becomes less dependent on cash transactions.

"As of November 8, excessive amount of cash and a very limited amount of digital transaction. There is a cost of transacting in cash and that cost of transacting in cash has to be borne by the economy, it is also to be borne by the political system.

These are costs which are visible, there are cost which are invisible. Excessive cash can also lead a lot of malpractices and therefore in the long run we are using this also as an opportunity to move towards digitisation," he said.

On government exempting card transactions below Rs 2,000 from service tax, he said, there will be a revenue implication as 70 per cent of the transactions currently are of less than that threshold.

The feedback from the industry is that the movement to the digital economy is "quite rapid," he said, adding "this will certainly make India into a less cash economy."

On whether the discounts will be provided by the private sector, Jaitley said, "it is PSUs which have taken this decision, the private sector has to decide in the world of competition. They are free to sell costlier petrol and face the consequences of the market."

The 10 per cent discount on using cashless modes to pay for RFID card/Fast-tags used for highway toll payments will be available only till March-end.

The discount on suburban train will begin from New Year in Mumbai where commuters will get a maximum discount of Rs 10.

Nearly 80 lakh passengers use seasonal or monthly tickets on suburban railways, largely in cash, spending worth nearly Rs 2,000 crore a year.

As more and more passengers will shift to digital means the cash requirement may get reduced by Rs 1,000 crore per year in near future, Jaitley said.

As much as Rs 1,800 crore worth of petrol and diesel is bought every day by nearly 4.5 crore customers and just 20 per cent of it is through cards, he said, adding that in last one month the percentage of digital mode of payment has doubled to 40 per cent.

The government, he said, is targeting at least 70 per cent of the daily sales to be through cards or e-wallets/mobile wallets to reduce cash exchange at petrol pumps by nearly Rs 2 lakh crore annually.

Also, public sector banks have been advised that merchants should not be required to pay more than Rs 100 as monthly rental for PoS terminals/Micro ATMs/mobile POS so as to bring small merchants on board the digital payment ecosystem.

The move will benefit about 6.5 lakh machines supplied by public sector banks to merchants. With lower rentals, more merchants will install such machines and promote digital transactions.

In order to expand digital payment infrastructure in rural areas, Jaitley said, the government through NABARD will extend financial support to eligible banks for deployment of 2 POS devices each in 1 lakh villages with population of less than 10,000.

"These POS machines are intended to be deployed at primary cooperative societies/ milk societies/ agricultural input dealers to facilitate agri-related transactions through digital means," he said.

The move will help cover population of nearly 75 crore, enabling them to transact cashless in their villages for their agri needs.

Economic Affairs Secretary Shaktikanta Das said it is a game changing package of incentives announced by Finance Minister to promote digital transactions and cashless economy. "Big boost to greater transparency in our economy. Will curb generation of black money," he tweeted.

Rural Regional Banks and Cooperative Banks will issue 'Rupay Kisan Cards' to 4.32 crore Kisan credit card holders to enable them to make digital transactions at POS machines/Micro ATMs/ATMs.

Jaitley said 58 per cent out of the nearly 14 lakh railway tickets purchased everyday are bought online. The discount offered now is expected to add another 20 per cent passengers to digital payment methods.

"Hence nearly 11 lakh passengers per day will be covered under the accidental insurance scheme," he said. Additionally, 5 per cent discount on payment through digital means would be given on paid services like catering, accommodation and retiring rooms.

Public sector insurance companies will provide incentive, by way of discount or credit, up to 10 per cent of the premium in general insurance policies and 8 per cent in new life policies of Life Insurance Corporation (LIC) sold through the customer portals, in case payment is made through digital means.

The Finance Minister said the central government departments and central PSUs will ensure that transactions fee/ MDR charges associated with payment through digital means shall not be passed on to the consumers and all such expenses shall be borne by them.

State governments are being advised that they and their organisations "should also consider to absorb the transaction fee/MDR charges related to digital payment to them and consumer should not be asked to bear it," he said.