In a bid to give a push
to Digital Economy and weed-out corruption and black money, the Union
Minister for Finance and Corporate Affairs, Shri Arun Jaitley in his
Budget Speech today said that the Government has decided that no
transaction above Rs 3 lakh will be permitted in cash. Accepting a
suggestion by Special Investigation Team on Black Money to ban cash
transactions above Rs 3 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, the Finance
Minister said that the Government will launch two new Schemes to promote
the usage of BHIM App i.e, 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, The Finance Minister Shri Jaitley
informed the House that 125 lakh people have adopted the BHIM app so
The Finance Minister Shri Jaitley 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, Shri 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. The
Finance Minister said that a shift to digital payments has huge benefits
for the common man. The earlier initiative of the Government to promote
financial inclusion and the JAM trinity were important precursors to the
current push for digital transactions, the Finance Minister added.
In a bid to incentivize the digital transactions, the Finance Minister
Shri Jaitley proposed that the presumptive income tax for small and
medium tax payers whose turn-over is up to Rs 2 crore will be reduced
from the present 8% of their turnover which is counted as presumptive
income to 6% in respect of turnover which is received by non-cash means.
This benefit will be applicable for transactions undertaken in the
current year also, he added.
The Finance Minister also proposed to limit the cash expenditure
allowable as deduction, both for revenue as well as capital expenditure,
up to Rs 10,000. Similarly, the limit of cash donation which can be
received by a Charitable Trust is being reduced from Rs 10,000/- to Rs
To promote cashless transactions, the Finance Minister in the Budget has
proposed to exempt BCD, Excise/CV duty and SAD on miniaturised POS card
reader for m-POS, micro ATM standards version 1.5.1, Finger Print
Readers/Scanners and Iris Scanners. He also proposed to exempt parts and
components for manufacture of such devices, so as to encourage domestic
manufacturing of these devices.
To strengthen and regulate the digital economy, the Finance Minister has
proposed to create a Payments Regulatory Board in the Reserve Bank of
India(RBI) by replacing the existing Board for Regulation and
Supervision of Payment and Settlement Systems. The Committee on Digital
Payments constituted by the Department of Economic Affairs has
recommended structural reforms in the payment eco system, including
amendments to the Payment and Settlement Systems Act, 2007. The
Government will undertake a comprehensive review of this Act and bring
about appropriate amendments, Finance Minister added.
To strengthen the digital payment infrastructure and grievance handling
mechanisms, the Finance Minister said in his Budget Speech that the
focus would be on rural and semi urban areas through Post Offices, Fair
Price Shops and Banking Correspondents. He added that steps would be
taken to promote and possibly mandate petrol pumps, fertilizer depots,
municipalities, Block offices, road transport offices, universities,
colleges, hospitals and other institutions to have facilities for
digital payments, including BHIM App. A proposal to mandate all the
Government receipts through digital means, beyond a prescribed limit, is
under consideration. The Government will strengthen the Financial
Inclusion Fund to augment resources for taking up these initiatives, the
Finance Minister added.
In his Budget Speech, the Finance Minister informed that increased
digital transactions will enable small and micro enterprises to access
formal credit. He said that the Government will encourage SIDBI to
refinance credit institutions which provide unsecured loans, at
reasonable interest rates, to borrowers based on their transaction
The Finance Minister assured the House that the Government will consider
and work with various stakeholders for early implementation of the
interim recommendations of the Committee of Chief Ministers on digital
Shri Jaitley said that the Government is considering the option of
amending the Negotiable Instruments Act to ensure that the payees of
dishonoured cheques are able to realise the payments.