In a boost to the 'digital economy' and weed-out corruption and black money, finance minister Arun Jaitley said in his Budget speech that the government has decided that no transaction above Rs3 lakh will be permitted in cash.
Accepting a suggestion by Special Investigation Team on black money to ban cash transactions above Rs3 lakhs, the finance minister has proposed an amendment to the Income-tax Act in the Finance Bill.
Presenting the General Budget 2017-18 in the Parliament, he said that the government will launch two new schemes to promote the usage of BHIM App - a Referral Bonus Scheme for individuals and a Cashback Scheme for merchants.
BHIM App was launched to promote digital transactions and will unleash the power of mobile phones for digital payments and financial inclusion (See: BHIM payments app proves a hit despite glitches).
Jaitley said that 125 lakh people have adopted the BHIM app so far.
He also announced that Aadhar Pay, a merchant version of Aadhar Enabled Payment System, will be launched shortly. This will be specifically beneficial for those who do not have debit cards, mobile wallets and mobile phones.
A mission will be set-up with a target of 2,500 crore digital transactions for 2017-18 through UPI, USSD, Aadhar Pay, IMPS and debit cards. Banks have targeted to introduce additional 10 lakh new PoS terminals by March 2017. They will be encouraged to introduce 20 lakh Aadhar based PoS by September 2017.
Highlighting the government's strategy to clean the system through digital economy, Jaitley said that it has a transformative impact in terms of greater formalisation of the economy and mainstreaming of financial savings into the banking system. This, in turn, is expected to energise private investment in the country through lower cost of credit. India is now on the cusp of a massive digital revolution, he added.