BENGALURU: The government has proposed to do away with transaction charges on card payments at petrol pumps, gas agencies and for railway tickets. In a circulated draft paper, the finance ministry has also proposed income tax benefits for people making payments through credit or debit. The move is aimed at encouraging non-cash transactions and curbing the flow of black money, according to ndtv.com.

1. Tax rebate can be extended to a merchant if at least 50 percent value of the transactions is through electronic means. Alternatively, 1 percent-2 percent reduction in value added tax could be considered on all electronic transactions by the merchants. The government has also proposed to make it mandatory to settle high-value transactions of over 1 lakh through the electronic mode.

2. Utility service providers like electricity companies and telecom operators could give a discount to users for payments made through electronic transactions, similar to BSNL, which provides an incentive of 1 percent of the billed amount if the payment is done through electronic mode.

3. To encourage electronic transactions, the government also proposed new redressal mechanisms in cases of fraud. In case of a fraudulent transaction, the money will be credited back to customer's account and blocked and subsequently released after the investigation is complete/ limited to a maximum of 3 months.

4. The government is also considering levying a nominal cash handling charge on transactions greater than a specified level. This means that beyond a certain amount if customers pay by cash they could be asked to pay a transaction fee. There could also be no transaction charges on card payments at petrol pumps, gas agencies, and for railway tickets.

5. The Finance Ministry has also prepared the draft proposals after consultations with various stakeholders including RBI, public and private sector banks, card service providers, mobile service providers, and research institutions.

6. There could also be no transaction charges on card payments at petrol pumps, gas agencies, and for railway tickets. High value transactions of more than Rs 1 lakh may be allowed through electronic means only. It is estimated that less than 10 percent of value of transactions in India are made electronically.

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