The Next Round Of Indian Economy Is Digital
Few provisions showing governments intent to discourage cash and encourage digital as a mode of transacting has been discussed below
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Immediately after demonetisation, the government has been pushing towards educating people with digital economy and also incentivizing people for the same. Keeping the same in mind, the Union Budget 2017 which was tabled on February 01,2017 showed clear indication that cash economy slowly but surely is going to be a thing of the past. Few provisions showing governments intent to discourage cash and encourage digital as a mode of transacting has been discussed below.
1. Restriction on cash receipt with 100 per cent penalty on non compliance
o A new section 269ST is proposed to be inserted in Income Tax Act, which restricts any person to receive an amount of Rs 3 lakh or more by way of cash
o In aggregate from a person in a day or
o In respect of a single transactions or
o In respect of the transactions relating to one event or occasion from a person.
In case of contravention, penalty equivalent to the value of such transaction will be imposed, unless sufficient reasons for contravention are proved.
2. Discouraging revenue expenditure to be made in cash
o Currently any revenue expenditure in excess of Rs 20,000 in a day through a mode other than account payee cheque/draft is disallowed in computing taxable profit. Such amount of Rs 20,000 has been reduced to Rs 10,000 per day
o Payments made using electronic clearing system through a bank account has been included in the permitted mode of payment.
3. Discouraging capital expenditure to be made in cash
o No depreciation for capital asset acquired in cash (or in a mode other than permitted modes of payment) for an amount above INR 10,000 in a day
o Similarly, capital expenditure incurred by the taxpayer eligible for Investment Linked Tax Incentive, through a mode other than permitted mode of payments would be disallowed.
4. Discouraging donations in cash
o Deduction under section 80G for payments above Rs 2,000 shall be available only if the donations are made through any mode other than cash.
5. Encouraging Small and Medium Enterprises to go digital
o Small business with turnover upto Rs 2 crore are allowed to opt for payment of tax on a presumptive basis (with no requirement of maintaining books of accounts or audit) where 8 per cent of the turnover is taken as taxable income.
o It is proposed to reduce the tax rate from 8 per cent to 6 per cent to the extent turnover constitutes payments received by way of account payee cheque/draft/electronic clearing system.
The above are nice and bold moves by our Ld. Finance Minister., keeping in view that India needs a complete image makeover in its next round of growth.
The two things which would be required to build users confidence is a strong digital infrastructure and a robust grievance handling system. Though Arun Jaitley mentioned that Post offices, fair price shops and banking correspondents will be used to promote cashless transactions, but there may be some challenges ahead as majority of Indian population who lives in rural and semi-urban areas are still not aware or are reluctant to step in the next round of digital India.
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