Don't miss..Service charge on card transactions to be abolished!
| March 15, 2017, 5:59 a.m.
New Delhi: If Centre accepts and implements recommendations of the Justice MB Shah SIT who has been appointed to look into means to curb generation of black money then heavy service tax on credit/debit card transactions are likely to be removed.
In a meeting of senior officials held in Ahmedabad on March 11, the Shah panel in a suggested that perks like medical insurance, life insurance and pension be given to senior citizens who pay taxes regularly.
The suggestion to abolish levy on e-transactions is significant as banks and e-gateway providers make huge money from crores of transactions per day. All across India, 115 e-transactions took place in January.
RBI caps levy To encourage digital payments, the Reserve Bank of India (RBI) has already cut down transaction charges. The central bank has capped Merchant Discount Rate (MDR) —the commission paid to the bank for every transaction made by the user — for debit card payments to 0.25% for transactions up to Rs 1,000, 0.50% for transactions up to Rs 2,000 and 1% for transactions above Rs 2,000. For credit card transaction worth Rs 1,000, service charge is capped at Rs 25.
‘Charges can be rationalised, not abolished’ According to a report in Mirror, top bank official said, "Bankers can rationalise card transaction levy but complete abolition is not feasible. Payment gateway companies are vendors in online transactions and banks to have to pay them for bearing the cost of every transaction.”
Citizens upset with levy on cash transactions The banks have started charging citizens even for cash transactions. Citizens are being forced to limit number of ATM transactions by various banks.
Perks for senior citizens The panel also suggested perks for senior citizens paying regular taxes. Perks like medical insurance, life insurance cover and pension to regular tax payers who pay tax on income of Rs 20 lakh or more should be given. The perks should be given to senior citizens as their means of earning decrease with advancing age.