MUMBAI: In a bid to encourage electronic payments, the Reserve Bank of India (RBI) has decided to cap the Merchant Discount Rate (MDR) applicable on transactions conducted via debit cards from January 1, 2018.

The cap on MDR for debit card transactions has been based on two newly created categories - small merchants with turnover up to Rs20 lakh and other merchants with turnover above Rs 20 lakh - RBI said.

According to the country’s central bank, cap on ‘POS’ (Point of Sales) has been kept at Rs1,000 per transaction or 0.90 per cent of the transaction value for “other merchants”, while that of Rs200 or 0.40 per cent has been set for “small merchants”.

The MDR for QR code-based transaction has been capped at Rs200 or 0.30 per cent for “small marchants” and Rs1,000 or 0.80 per cent for “other merchants”.

“In recent times, debit card transactions at ‘POS’ have shown significant growth. With a view to giving further fillip to acceptance of debit card payments for purchase of goods and services across a wider network of merchants, it has been decided to rationalise the framework for MDR applicable on debit card transactions based on the category of merchants,” the RBI said in a statement post its fifth monetary policy review on Wednesday.

The country’s central bank added that the revised MDR aims at achieving the twin objectives of increased usage of debit cards and ensuring sustainability of the business for the entities involved.

INCOME TAX CAP

India Inc has demanded income tax cap of 20 per cent. Bringing down the maximum Income Tax slab to 20 per cent, convergence to three-four GST slabs and bringing all items under it were among the demands made to Union Finance Minister Arun Jaitley by industry and trade representatives.

During his pre-Budget consultations, Jaitley urged business leaders to invest in the infrastructure sector to build a stronger India.

He said private investment, along with public and foreign investment, is the key to boost growth and create more job opportunities in India.

The Minister said the government had taken various steps, including setting up of the National Investment and Infrastructure Fund (NIIF), to boost investment in the infrastructure sector.

Industry representatives made various suggestions, including bringing down maximum income tax to 20 per cent to encourage investment, a Finance Ministry statement said.

The stakeholders also highlighted the need for only three-four tax slabs under the Goods and Services Tax (GST) regime and to include in it all items excluded till now.

They also demanded that the benefit of filing quarterly returns under the GST be extended to all, instead of limiting it to those with a turnover of above Rs 1.5 crore.

They urged the government to permit the purchase of Banks Recapitalisation Bonds by institutes and the public at large, reduce government stake in public sector banks, and allow banks to securitise their loans and sell the same.

The government should consider further consolidation and even privatisation of some of the public banks, having at the most five to six large banks, they said.

Indo-Asian News Service