Digital payments don’t need fiscal intervention
There is no compelling need to give tax refunds to consumers
The committee on digital payments, led by Andhra Pradesh chief minister N. Chandrababu Naidu, submitted its interim report this week. The committee was constituted after the Union government’s decision to withdraw high-value currency notes, which resulted in a cash crunch in the economy. Apart from measures to smoothen digital transactions, the committee has suggested changes such as imposing a banking cash transaction tax on transactions above Rs50,000. After it was reported that some of the suggestions of the committee maybe considered in the forthcoming budget, the finance ministry has clarified that the government has not taken a final view on the recommendations and a decision will be taken in due course. The government would do well to move carefully and avoid decisions that will have negative implications in the long term.