The government is planning to offer a 2-per cent rebate on GST payments made through digital means, in cases where the bill is up to Rs2,000, in a move to incentivise digital transactions and discourage cash payments.
This means that goods and services bought and payments made online will cost less than when paid for in cash, as the applicable GST rate for such transactions will be lower by 2 percentage points, reports citing official sources said.
Reports said, the finance ministry is currently discussing the proposal with the cabinet secretariat the ministry of electronics and Information Technology and the Reserve Bank of India.
The benefit may come in the form of a discount or cash-back, as per the reports which quoted discussions among the finance ministry, RBI, cabinet secretariat and ministry of electronics and IT.
A majority of cash transactions are in small amounts of Rs2,000 or less and if these can be brought online, then the remaining can be easily tackled, according the government's strategy.
The IT ministry is leading the government's efforts on digital payments and has been taking stock of initiatives to further popularise electronic payments.
The Prime Minister, while addressing the nation on the 71st Independence Day had asked people to use less cash and had encouraged individuals to shift to digital payments. The IT ministry, which is leading the efforts to further popularise electronic payments, has also launched a slew of initiatives to promote digitalisation.
Once the incentive helps bring small transactions in the digital mode then it would provide an impetus to digital payments and higher volumes can also brought under the fold.
The ultimate aim is to incentivise all kinds of digital payments, especially smaller transactions that would in turn help in fulfilling the government's plan of making India a less-cash economy.
The growth in electronic transactions witnessed during the demonetisation period, until at least till March, has since slowed down considerably as the availability of cash has gone up.
The number of electronic transactions went up post demonetisation from 670 million in November 2016 to 890 million in March 2017. A report by RBI stated that only 84 million transactions were recorded in June.