Petrol, insurance premia get cheaper in govt's cashless push

In a bid to promote cashless transactions in its push towards a digital economy, the government today announced discount on an array of services from buying petrol to insurance and railway tickets through the digital mode besides waiving service tax on card transactions of up to Rs2,000.

Announcing the decision, finance minister Arun Jaitley said, all digital payments for purchases of petrol and diesel through debit/credit cards, e-wallets and mobile wallets will get a discount of 0.75 per cent.

Jaitley said that 11 services, including online booking of railway tickets will become cheaper through digital transactions. Online booking of railway tickets will also make the passenger eligible for a Rs10 lakh accident insurance.

He also announced that all those who pay toll tax through RFID (Radio-frequency identification) or FASTag procured through digital payment will get 10 per cent discount.

The date for rolling out the scheme will be notified shortly, he said.

The announcement comes in the wake of a shortage of cash following the cancellation of the legal tender character of old Rs500 and Rs1,000 notes, which also brought about a surge in digital transactions through use of credit/debit cards and mobile phone applications/e-wallets etc.

To further accelerate this process, the central government has decided on a package of incentives and measures for promotion of digital and cashless economy in the country.

These incentives/measures include:

  • State-run oil marketing companies will offer a discount of 0.75 per cent on the sale price of petrol/diesel if payment is made through digital means. Nearly 45 million customers buy petrol or diesel at such petrol pumps per day who can take benefit of this incentive scheme.  It is estimated that petrol/diesel worth Rs1,800 crore is sold per day to the customers out of which nearly 20 per cent was being paid through digital means.
  • To expand digital payment infrastructure in rural areas, the central 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. This will benefit farmers of one lakh village covering a total population of nearly 750 million who will have facility to transact cashlessly in their villages for their agri needs.
  • The central Government through NABARD will also support Rural Regional Banks and cooperative banks to issue `Rupay Kisan Cards' to 43.2 million Kisan Credit Card holders to enable them to make digital transactions at POS machines/micro ATMs/ATMs;
  • Railways through its suburban railway network will provide incentive by way of discount up to 0.5 per cent to customers for monthly or seasonal tickets from 1 January 2017, if payment is made through digital means. Nearly 8 million passengers use seasonal or monthly ticket on suburban railways, largely in cash, spending worth nearly Rs2,000 crore per 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;
  • All railway passengers buying online ticket will be given free accidental insurance cover of up to Rs10 lakh. Nearly 1.4 million railway passengers buy tickets every day, out of which 58 per cent tickets are bought online through digital means. It is expected that another 20 per cent passengers may shift to digital payment methods of buying railway tickets. Hence nearly 1.1 million passengers per day will be covered under the accidental insurance scheme;
  • For paid services, eg, catering, accommodation, retiring rooms etc being offered by Railways through its affiliated entities/corporations to the passengers, it will provide a discount of 5 per cent for payment of these services through digital means. All the passengers travelling on railways availing these services may avail the benefit;
  • 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 sold through the customer portals, in case payment is made through digital means;
  • Central government departments and central public sector undertakings will ensure that transactions fee/MDR charges associated with payment through digital means will not be passed on to the consumers and all such expenses will be borne by them. State governments are being advised that the state governments and its organizations 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;
  • Public sector banks are advised that merchants should not be required to pay more than Rs100 per month as monthly rental for PoS terminals/micro ATMs/mobile PoS from the merchants to bring small merchant on board the digital payment eco system. Nearly 6.5 lakh machines by public sector banks have been issued to merchants who will be benefitted by the lower rentals and promote digital transactions. With lower rentals, more merchants will install such machines and promote digital transactions;
  • No service tax will be charged on digital transaction charges/MDR for transactions up to Rs2,000 per transaction;
  • For the payment of toll at toll plazas on national highways using RFID card/Fast Tags, a discount of 10 per cent will be available to users in the year 2016-17.