The government wants to give less-cash economy a major push by incentivising digital transactions with a possible cash back offer or discount of 2 per cent on bills up to Rs 2,000. The 2% incentive will be over the applicable GST tax rate. The Times of India, citing sources, reported that the Finance Ministry, the RBI, cabinet secretariat, ministry of electronics and IT were holding discussions over the proposal.
The government, specifically, wants to encourage people to use digital methods for day to day smaller transactions. The Ministry of Information and Technology is believed to be spearheading the effort and planning methods to promote digital transactions.
In fact, IT minister Ravi Shankar Prasad and other senior officials reportedly attended a meeting to discuss the progress in digital transactions since demonetisation. The government plans to offer the 2 per cent discount to transactions up to Rs 2,000 because such transactions are high in volume.
“Transactions of up to Rs 2,000 are very high in volumes and if an incentive can be given here, it will provide an impetus to digital payments while facilitating the entry of more people within the formal economy. This will help plug leakages while playing a credible part in countering the development of black money,” The Time of India quoted the source as saying.
The government has been stressing on digital transactions ever since Prime Minister Narendra Modi announced the decision to demonetise Rs 500 and Rs 1000 in November last year. The government has been repeatedly taking steps to reduce cash transactions and increase digital transactions.