Offer Tax Incentives to Encourage Use of Credit, Debit Cards : White Paper

In a bid to check the black money stashed abroad, the Finance Minister on Monday, tabled a white paper on black money in Parliament. The white paper suggested tax incentives to encourage use of debit cards and credit cards, along with the electronic transfer of funds.

The white paper says that, the greater use of credit and debit cards along with promoting the banking channels can help in checking black money as they leave adequate audit trails to the IT department. It also says that, provision for collection of tax at source on low level cash purchases is considered as possible policy option.

The report said that, payment of wages and salaries in the private sector should also be through banking channels in order to make cash-less payments and meet the government objective of financial inclusion. The payments through e-service and e-transfer facilities available in trade, can help in strengthening and discouraging unaccounted activities.

According to the RBI data, the report shows rising use of debit cards in India. It also shows that, at present, there are no legal restrictions on individuals keeping very large amounts of cash with them or transporting it from one place to another. But there have been suggestions that, the government may consider amending existing laws or may enact an entirely new statute aimed at regulating the possession and transportation of cash above a particular limit.

However, the white paper said, such laws need a wider political agreement to be accepted in Parliament.