As per the reports, the government is planning to waive merchant discount rate (MDR) on all debit cards, to push digital payments.
How Did This Happen?
It is expected that they would be announcing this news when the Union Budget is presented on February 1, as the the report said.
The government recently scrapped MDR on payments made through Rupay debit cards and the Unified Payments Interface (UPI).
As per the report, the Commercial banks have been seeking compensation for losses related to MDR, and this could cost the exchequer Rs 2,000 crore annually.
What Does the Government Have To Say?
So far, the finance and IT ministries have not responded to requests for comment. Spokespersons for State Bank of India (SBI) and Visa declined to comment.
In July 2019, the Finance Minister Nirmala Sitharaman has said that business establishments with a turnover of Rs 50 crore would not be allowed to charge MDR in her Budget speech.
After that, on December 30, 2019, a government notification scrapped the processing fee on digital payments.
They also mandated all companies with a turnover of Rs 50 crore to adopt UPI and Rupay payments in their circular.
From February 1, 2020, the penalty for non-compliance,, is Rs 5,000 per day, the Central Board for Direct Taxes said in a separate circular.
Why Indian Retails Will Get Attention In Budget 2020?
India is one of the fastest growing economies in the world, and much of this growth is attributed to the burgeoning middle class that fuels economic growth through retail consumption.
Around 43 million people are employed in the retail industry and the industries that support retail businesses, according to the Retailers Association of India (RAI).
It is the fastest-growing in terms of employment generation, and is second only to agriculture in terms of the number of people it directly employs, besides creating indirect employment opportunities.
Citing these figures, the RAI has submitted its recommendations to the Ministry of Finance, for consideration in the Budget 2020 that may give a further boost to the retail industry.
This recommendation includes topics like, Expedite the process of National Trade Policy, FDI Policy, Adoption of the Model Shops and Establishments Act, Promotion of digital and modern retail, GST on branded/unbranded food grain and cereals, GST on apparels and clothing, Refund of accumulated input tax credit, Boost consumption story, MAT Rate.