India to offer tax benefits to promote cashless economy
NEW DELHI : India will offer tax incentives to small businesses engaged in cashless transactions, Finance Minister Arun Jaitley told reporters on Tuesday, as part of the government’s fight against the cash economy.
Jaitley said the move would enable businesses with annual turnover of 20 million rupees ($ 294,000) to save up to 30 percent in tax payments. Since Prime Minister Narendra Modi’s shock move last month to scrap old 500 and 1,000 rupee notes, New Delhi has taken a raft of measures to encourage cashless transactions.
Earlier this month, it announced incentives including discounts of between 0.75 percent to 10 percent on digital payments for purchases of petrol, diesel and insurance products from state-run companies.
The government last week also unveiled two lucky draw schemes to reward poor and middle-class consumers and small businesses for conducting cashless transactions.
Modi’s shock currency replacement programme is aimed at flushing out cash earned through illegal activities, or earned legally but never disclosed. However, the decision has sucked 86 percent of India’s currency out of circulation, leaving companies, farmers and households all suffering. Nine in 10 Indians live in the cash economy and many lack the smartphones and bank accounts they need to go cashless.
