India Looks at Tax Break for Credit Cards
June 23, 2015 Taxation in India
NEW DELHI – The government of India hopes to make tax evasion harder by ensuring that more people use traceable electronic methods to make their regular payments.
On June 22nd the government of India released a new draft paper detailing a number of tax measures aimed at reducing the incidence of tax evasion it the country, including tax breaks for using credit and debit cards instead of cash.
Under the details of the government’s proposal, individual consumers who carry out a significant portion of their regular and incidental spending using a credit card, debit card, or other form of electronic payment, should be eligible to receive a small tax concession on their personal income tax obligations.
Further, in order to incentivize retailers to accept payment with cards, it is proposed that businesses which see a high portion of their payments received via a card should be eligible for tax breaks also.
In order to ensure that high end purchases are not conducted in cash, it was proposed that any purchase valued at over INR 100 000 will be required to be made electronically.
The push to electronic and card based payment is part of the government’s effort to help combat tax evasion, by ensuring that purchases are traceable and recorded, helping ensure that businesses do disclose their full sales, and that tax authorities are able to obtain a clear understanding of the spending and assets of individuals.
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