Rs 2000 service tax waiver: Here's the average that Indians spend on card transactions
The Government is now considering waiving off service tax on debit and credit card transactions up to Rs 2000.
Amid the cash crunch situation in the country, the government is likely to waive service tax on debit and credit card transaction of up to Rs 2000, PTI reported quoting sources.
PTI said, The government has decided to "exempt services by an acquiring bank to any person in relation to settlement of an amount up to Rs 2,000 in a single transaction transacted trough credit, debit card or other payment card service".
Reserve Bank of India (RBI) data, in August, showed that there were 2.63 crore credit cards in the country. Adding the amount of transactions via ATMs and Point of Sale (POS), the total amount spent using credit cards in the month of August 2016 came to Rs 26,052.7 crore. This means, nearly Rs 9,900 was spent per credit card in India in the month of August.
Similarly for debit cards, RBI data show 71.24 crore debit cards circulating in the country. Total spending in the month of August using debit cards stood at Rs 2.38 lakh crore bringing the average spend per debit card in the month of August to nearly Rs 3,340 per debit card.
To promote cashless transactions and pushing digital economy, the Government is now considering waiving off service tax on debit and credit card transactions up to Rs 2000.
Banks have also been asked to install additional 10 lakh POS terminals by March 31 and excise duty exemption has been given for imports of these machines.
Clearly, with average debit and credit card transactions in the range of Rs 3,340 and Rs 9,900 for the month of August, waiver of 15% Service Tax will lead to faster adoption of plastic money.