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CM panel on digital payments wants tax on cash transactions, and push Aadhaar payments

Nearly a month after the demonetization of Rs 1000 and Rs 500 notes ended, the committee of chief ministers on digital payments has submitted its report to NITI Aayog. The panel, headed by Andhra Pradesh chief minister Chandrababu Naidu, recommended measures such as tax incentives for adopting digital payments, promote payments via Aadhaar and introducing a tax on cash transactions. Note that many of these measures have already been recommended by the Watal Committee on digital payments and this panel seems pointless at the moment unless it lays out more concrete steps to push digital payments in states. The report, submitted last week, also lists which branch of government or ministry will have to take action on the recommendations. Interestingly, for some of the measures relating to the Unified Payments Interface (UPI) and merchant discount rate (MDR), the panel has directed the National Payments Corporation of India (NPCI) to take action. It's worth remembering the the NPCI is not a government entity and that the UPI is owned and operated by the NPCI, which is owned 100% by banks. Changes in taxation - Relief in prospective taxes for encouraging merchants to accept digital payments and no retrospective taxation to merchants doing digital transactions. To this effect, the Central Board of Direct Taxes (CBDT) said small businesses and traders with a turnover less than Rs 2 crore will now get tax benefits if they adopt digital means of payments. The CBDT considers 8% of annual turnover as profit for such businesses and is taxed on the profit…

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