Demonetisation: Govt to waive service tax on card transactions up to Rs 2,000

 In a bid to promote digital transactions, Modi government will waive service tax on debit and credit card transactions of up to Rs 2,000 amid cash crunch following withdrawal of old Rs 500 and 1,000 banknotes.

Updated: Dec 08, 2016, 23:03 PM IST
Demonetisation: Govt to waive service tax on card transactions up to Rs 2,000

New Delhi: In a bid to promote digital transactions, Modi government will waive service tax on debit and credit card transactions of up to Rs 2,000 amid cash crunch following withdrawal of old Rs 500 and 1,000 banknotes.

PTI has reported quoting sources that the government has decided to "exempt services by an acquiring bank to any person in relation to settlement of an amount up to Rs 2,000 in a single transaction through credit, debit card or other payment card service.

A notification to this effect will be tabled by Finance Minister Arun Jaitley in Parliament.

Following demonetisation of old high value notes, the government has been taking steps to promote cashless or digital transactions to take India towards a less-cash economy.

The government has asked banks to install 10 lakh additional point of sale (PoS) terminals within four months. Towards this end, banks have already placed orders for 6 lakh PoS machines and another 4 lakh are likely to be ordered in the next few days, a Finance Ministry statement said.

There are about 15 lakh PoS terminals currently across different merchants to facilitate card based payments.

Point of Sale (PoS) devices are used for cashless transactions, both for making payments or disbursing cash. PoS do not attract any basic customs duty. To further reduce the cost of such devices and thereby encourage digital payments, the government has exempted such devices from central excise duty.

Consequently, these devices will also be exempt from additional duty of customs [commonly known as CVD] and additional duty of customs [commonly known as SAD]. Simultaneously, to encourage domestic manufacturers of such devices, all goods required for the manufacture of POS devices have also been exempted from excise duty, and consequently from CVD and SAD. These exemptions will be valid till 31st March 2017.

With PTI Inputs