wordpress blog stats
Connect with us

Hi, what are you looking for?

Jharkhand waives off VAT on mobiles below Rs 5,000 to push mobile banking


The state government of Jharkhand has decided to waive off value added tax (VAT) on mobile phones below Rs 5000, including both feature phones and smartphones, reports the Hindustan Times. The initiative is undertaken with the goal of encouraging mobile and cashless banking in the state.

The state normally charges 14% VAT on most goods. For a Rs 5000 device, this should save the user ~ Rs 700 if the benefit is indeed passed on by manufacturers/shopkeepers. It’s not clear if purchases from outside the state (specifically from ecommerce website), will also be VAT free.

Various government agencies have been pushing for adoption of digital payments since the surprise demonetization move last month. Last week NITI Aayog launched a series of incentives for encouraging digital payments for day to day financial transactions like buying or selling goods/services, transferring money etc., at the district, taluk and panchayat level, while various banks have sped up the adoption of the Unified Payments Interface (UPI), and other means to encourage digital payments.

More significantly, to boost usage of debit and credit cards for small value transactions, the government waived off service tax for transactions up to Rs 2,000Note that this exemption applies only to the Merchant Discount Rate (MDR) which banks levy on merchants and not on the whole Rs 2,000. This might mean that banks will pass on the benefit of the service tax exemption to merchants and lower the MDR.

Government has also removed excise duty on the import of goods for the manufacturing of POS  machines.

Note that while digital payments have increased during this period, it has also overburdened POS terminals across the country and bank servers with the additional load causing transactions to fail, and first time users not having the best experiences. While demonetization is also an opportunity to take bank account usage beyond just ATM withdrawals, adequate care must be taken to ensure that failing transactions and/or network do not put off new users from using digital payments in the future.

It’s also worth noting that state government have also started imposing ecommerce taxes on shopping goods online which, ironically, is pretty much equivalent to discouraging online buying and selling, while at the same time incentivizing and encouraging people to convert to using digital payments.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like


BharatPe has raised $20 million (₹139 crore) through a debt funding round from Alteria Capital and ICICI Bank. The merchant-focused loan and payments app...


The Delhi High Court on Monday stayed a penalty issued by the Finance Ministry’s Financial Intelligence Unit (FIU) against PayPal Payments Private Limited, the...


A survey by the National Payments Corporation of India (NPCI) found that at least 80% of households now use digital payment apps like Paytm,...


Between January and June 2020, Twitter received 12,700 information requests from governments and law enforcement agencies around the world, reflecting a significant increase of...

MediaNama is the premier source of information and analysis on Technology Policy in India. More about MediaNama, and contact information, here.

© 2008-2018 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ

Subscribe to Daily Newsletter

    © 2008-2018 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ