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On Wednesday, the government took another major step towards cashless economy directing all public sector banks to lower the fees for digital transactions up to March 31, 2017. Let me remind you that all this came into play after the bold Demonetization move last month by the ruling government. Since 8th of November, a number of RBI directives have come to light which may or may not have comforted the masses. This new announcement draws out the minute flaws of going cashless which is quite under speculation these days.
“In order to further promote digital and card payments, the Department of Financial Services, Ministry of Finance has issued a direction in public interest to all public sector banks, in accordance with which these banks shall not charge fees for transactions settled on Immediate Payment Service (IMPS) and Unified Payments Interface (UPI) in excess of rates charged for National Electronic Funds Transfer (NEFT) for transactions above ₹1,000, with service tax being charged at actuals,” the government said in a statement.
“For Unstructured Supplementary Service Data (USSD) transactions above ₹1,000, a further discount of fifty paise on these rates shall apply,” the statement added.
In addition to this, the NEFT transfer fee has also been reduced as follows:
- ₹2.50 per transaction Up to ₹10,000
- ₹5 per transaction between ₹10,000 and ₹1 lakh
- ₹15 per transaction between ₹1 lakh and ₹2 lakh
- ₹25 per transaction above ₹2 lakh
However, the applicable service tax is to be charged above this fee. The government has not yet specifically mentioned the date for its practical implementation, but it is expected to apply for all transactions up to 31 March 2017. The news is followed by the RBI's notification on last Friday in which it instructed banks to remove all charges for transactions up to ₹1000 settled on IMPS, USSD or UPI systems between January 1, 2017, and March 31, 2017.
Post the ban on ₹500 and ₹1000 rupee notes and arrival of ₹2,000 notes and waiver of the service tax up to ₹2,000 on Credit and Debit card payments, digital payments have become the friendly need of everyone. Demonetization has given a push to online payment portals and has proved to be a boon for Paytm for sure. One of the most significant things to witness is that more than 25 lakh people in rural areas of the country have adopted the digital mode of payments through 'Digi Dhan Abhiyan' the Ministry of Electronics & Information Technology (MeitY) claims.