Union Budget 2017: Big Boost for Digital Payments in India

In the Union Budget 2017-18, the Finance Minister Arun Jaitley has announced to launch two new schemes to boost digital payments via Bharat Interface for Money (BHIM) App in India. These are: A referral bonus scheme for individuals and a cashback for merchants who accept payments from BHIM.

The Unified Payments Interface (UPI)-based BHIM app was recently integrated with Unique Identification Authority of India (UIDAI) (or Aadhaar Number). It is expected to that the biometric-based Aadhaar Pay option will soon be available on the app and iOS version will soon be available for users.

Highlights of Digital Boost in Union Budget 2017

For IRCTC users: The service charge on e-tickets booked through IRCTC will be withdrawn.

For Rural India: 10,000 crore has been allocated for Bharat Net Project to promote digital transactions into rural India. Under the project, the high-speed internet connectivity will cover approx 150,000 gram panchayats with Wi-Fi hotspots and digital services will be access at low tariffs. A DigiGaon initiative will also be launched to provide tele-medicine, education and skills through digital technology.

Black Money: No transaction above 3 lakh shall be permitted in cash to curb black money. For this, the Government would make suitable amendment to the Income-tax Act is proposed in the Finance Bill for enforcing this decision. In the budget, the limit of cash donation which can be received by a charitable trust is being reduced from 10,000 to 2000.

Funding of Political Party: Political parties will be entitled to receive donations by cheque or digital mode from their donors. The maximum amount of cash donation that a political party can receive will be 2000/- from one person.

FY 18 Target: The Union government has set up a target of 2,500 crore for digital transactions for FY18 through UPI, Unstructured Supplementary Service Data (USSD), Aadhaar Pay, IMPS and debit cards. The banks have targeted to introduce additional 10 lakh new POS terminals by March 2017. They will be encouraged to introduce 20 lakh Aadhar based POS by September 2017.

To promote cashless transactions, in the Union Budget Speech 2017, Mr. Jaitely proposed to exempt BCD, Excise/CV duty and SAD on miniaturised POS card reader for m-POS, micro ATM standards version 1.5.1, Finger Print Readers / Scanners and Iris Scanners. He also proposes to exempt parts and components for manufacture of such devices, so as to encourage domestic manufacturing of these devices. Apart from this, Mr. Jaitley has also revealed that a merchant version of the Aadhaar Enabled Payment System (AEPS) “Aadhaar Pay” will be launched soon. The Aadhaar Pay will be specifically beneficial for those who do not have debit cards, mobile wallets and mobile phones.

Arun Jaitley, has termed the Union Budget for 2017 as “Transform, Energise and Clean India” that means TEC India. The agenda of TEC India seeks to

  1. Transform the quality of governance and quality of life of our people.
  2. Energise various sections of society, especially the youth and the vulnerable, and enable them to unleash their true potential.
  3. Clean the country from the evils of corruption, black money and non-transparent political funding.

Arun Jaitley, the Union Finance Minister, said,

Promotion of digital economy is an integral part of Government’s strategy to clean the system and launch of BHIM app is an evidence of increased digital transactions.

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