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NEW DELHI: The government has proposed income tax rebates for consumers who pay a proportion of their expenditure through credit or debit cards among a string of other measures aimed at moving towards a cashless economy and reducing tax avoidance.The government on Monday unveiled the draft proposals for facilitating electronic transactions, a day after TOI reported the plan to push for cheaper card payments . The government will also examine the feasibility of removing convenience fee, service charge, surcharge for card payments at petrol pumps, gas agencies and for railway tickets.According to the draft proposals, tax benefits could also be provided to merchants for accepting electronic payments . “For example, an appropriate tax rebate can be extended to a merchant if, say, at least 50% value of the transactions is through electronic means,” it said.“Alternatively, 1-2% reduction in value added tax could be considered on all electronic transactions by merchants,” the draft paper said.The aim is to improve the ease of conducting transactions for individuals, build a transaction history to enable improved credit access and financial inclusion, reduce tax avoidance and minimize the impact of counterfeit money. It is also aimed at reducing the risks and cost of carrying cash for individuals and cut down the cost of managing cash in the economy, according to the draft proposals.The proposals have been prepared after intense discussions with the Reserve Bank of India and other stakeholders, banks, card service providers, mobile service providers and various departments.The draft said high-value transactions of more than Rs 1 lakh could be mandated to be settled through electronic means. There is also a proposal to raise the value of credit card transactions that banks have to report to Rs 5 lakh from the present Rs 2 lakh. At present, banks have to report aggregate of all payments made by a credit card holder as one transaction if such an amount is Rs 2 lakh in a year.It also talked about the possibility of reducing the merchant discount rate on debit card transactions. Currently, there is a merchant discount rate of 0.75% on debit card transactions up to Rs 2,000 and 1% on all transactions above Rs 2,000.Levying of a nominal cash handling charge on transactions greater than a specified level is also being proposed. The draft paper said the existing inter-change fee on debit and credit card transactions are not uniform and need to be standardized/rationalized to encourage both issuing and acquiring banks to set up and utilize acceptance infrastructure.It said the authentication requirement for different classes of transactions could be re-examined based on the risk profile and safety requirements. Utility service providers could be advised to give a discount to users for small ticket payments through e-payments, on the lines of BSNL, which provides an incentive of 1% of the billed amount if the payment is done through electronic mode. It said government departments will introduce acceptance infrastructure or adopt national e-payment gateway ‘PayGov India’ for collection of revenue, fee and penalties.To encourage mobile banking and payment channels, the draft proposals said unstructured supplementary service data charges could be reexamined and rationalized. Currently, telecom companies levy an unstructured supplementary service data charge of Rs 1.50 per transaction for mobile banking and payments.It also said there could be appropriate changes in the regulatory structure, if required, to promote mobile-based payment systems.To create an enabling environment for card payments, the draft proposed that banks could be asked to deploy a larger number of point of sale terminals (POS). Banks and other intermediaries would be asked to improve broadbrand connectivity to enable mobile-based payments on a wider scale.Finance minister Arun Jaitley in his 2015-16 budget speech had referred to the need to encourage electronic transactions and minimize cash transaction.“One way to curb the flow of black money is to discourage transactions in cash. Now that a majority of Indians has or can have a ‘Rupay’ debit card, I therefore, propose to introduce soon several measures that will incentivize credit or debit card transactions and disincentivize cash transaction,” Jaitley had said in his budget speech.The government has placed the draft proposals for facilitating electronic transactions and sought comments and views from the public up to June 29. It made it clear that the proposals are at a draft stage and do not imply any commitment from the government.