Our Digital Payments coverage is brought you by Chillr: India’s 1st multi-Bank instant mobile payment app enabling fund transfers to anyone in your phonebook In a bid to increase the adoption of digital payments in the country, the Union cabinet has decided to remove surcharge and service tax on digital payments, the government said in a release. Primarily, the move is done to curb the usage of cash and the government will announce a number of short term (within a year) and medium term (withing two years) measures which will be implemented by the government ministries, departments and organisations. Currently, service charge is currently levied by payment gateways and paid to the government. The vendor using a payment gateway also pays a convenience charge. On credit cards, it is 1-2.5%, according to this Business Standard report. "Promotion of payments through cards and digital means will be instrumental in reducing tax avoidance," the government said in its release The finance ministry had in July 2015 had considered tax rebates for card payments and at the time had suggested the rationalisation of the Merchant Discount Rate (MDR), which at present is 0.75% on Debit Card transactions of up to Rs 2,000 and 1% on all transactions above it. An MDR is an interchange fee which is paid to the bank that issued the credit card that was used in each transaction. The ministry also mulled income tax rebates for consumers who pay a certain proportion of their expenditure and bills through electronic means. The government…
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