MoF proposes relaxation of 1% Income Tax for credit/debit card payments

Credit or debit card users may get to avail 1% of their annual transactions as deduction from income, if a proposal made by a section of the finance ministry is implemented. The move could marginally reduce the income tax liability of credit and debit card users.

Similarly, service providers could also get a rebate on their income tax and service tax liability for promoting electronic transactions if the department of revenue (DoR) agrees with views expressed by the department of economic affairs (DEA).

DEA also suggested that the service providers could get a tax rebate if at least 50% of the value of their transactions is through electronic means or, alternatively, benefit from a 1-2% reduction in value-added tax (VAT) for all electronic transactions.

The meetings are expected to take place in the days to come and work out the exact nature of the tax incentives for the e-transactions.

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