CMs Committee on Digital Payments

The CMs Committee on Digital Payments led by the convener and Andhra Pradesh Chief Minister, Chandra Babu Naidu submitted the interim report on Digital Payments to the Prime Minister on January 24, 2017.

The Recommendations

Formulate Incentive Structure & Remove disincentives to make digital payments more attractive than cash:

  • Relief in prospective taxes for encouraging merchants to accept digital payments & no retrospective taxation to Merchants doing digital transactions.
  • Tax incentives to be extended to Micro ATMs, Biometric Sensors etc. Domestic production to be encouraged.
  • Tax refund for consumers using digital payment upto a certain proportion of annual income.
  • For Aadhaar Pay, Biometric (FP & Iris) sensors to be provided at 50% subsidy to all merchant points
  • AEPS to be promoted by incentivising & not charging MDR.

Expand & Strengthen Origination, Acceptance, Connectivity and Hardware Infrastructure

  • A subsidy of up to Rs.1000 to be provided for smart phones for non-income tax assesses or small merchants.
  • All payment banks and BCs to be made interoperable through AEPS.
  • Provide infrastructure for 1,54,000 post offices by way of interoperable Aadhaar enabled Micro-ATMs.
  • Create fund from savings generated through cash-less transactions for incentivising acquiring bank acceptance infrastructure creation in semi-urban and rural areas.
  • Contactless payments to be promoted for travelling in buses & suburban trains in metro cities.
  • UPI App should contain a common interoperable UPI QR Code. Banks to encourage the common QR Code at merchant location.
  • Rural and Urban Cooperative Banks should be onboarded to Digital Transactions mode immediately.

Create Authority & Formulate policy, Regulatory changes that promote adoption of digital payments:

  • Committee report on MDR submitted to RBI to be considered and operationalized.
  • Aadhar to be made primary ID for KYC. Section 57 of Aadhaar Act can be applied. Amendment to PMLA Rules required.
  • To curb use of cash for large transactions consider levy of banking cash transaction Tax (BCTT) on transactions of Rs. 50,000 & above.
  • Consider cap on maximum allowable limit of cash in all types of large ticket size transactions.
  • All government sections like insurance, educational institutes, fertilisers, PDS, Petroleum etc to switch to digital payments.
  • Lower/Zero MDR for all digital payments to Government entities.

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