A committee on digital payments formed to promote digitalization and chaired by Chief Minister Chandrababu Naidu in its interim report submitted to Prime Minister Narendra Modi at Niti Ayog has made various suggestions. The panel has recommended eliminating the Merchant Discount Rate charges (MDR) to make digital payments cheaper than cash. Panel has suggested banking cash transaction tax on transaction of Rs 50,000 and above. Further it suggested bringing all government insurance, educational institutes, fertilisers, PDS and petroleum sectors within the ambit of digital payments.
To boost digital payments, panel has suggested to provide Aadhaar-enabled micro ATM infrastructure for 1.54 lakh post offices and 50 per cent subsidy on Aadhaar Pay, Biometric (FP & Iris) sensors should be given to all merchant points. Further panel has said that all payment banks and banking correspondents should be made interoperable through AEPS.
Naidu said that there are lots of cost of handling physical currency because of its printing, movement and security while there is no such cost for digital currency and said that with the increase of volume of digital transitions. The panel made a case for relief in prospective taxes for encouraging merchants to accept digital payments and no retrospective taxation to Merchants doing digital transactions.