Pay no Service Tax on transactions up to Rs 2000

In yet another move towards a cash less economy, the government of India today decided to do away with levy of service tax on transactions up to Rs 2000 made from credit and debit cards.

The latest move comes amidst the slew of measures to move India towards a digital and less cash economy post the demonetisation drive by the current dispensation. Following demonetisation of old high value notes, there has been a cash crunch in the country as people have been queuing outside banks and ATMs to withdraw new currency notes.

A notification to this effect will be tabled by Finance Minister in Parliament to amend the current law. As of now, services provided by organisations such as United Nations and other international bodies are exempt from tax. Range of other services too provided by arbitral tribunals, testing of newly developed drugs, educational institutions, trade unions, general insurance business and sports bodies, etc., are among the ones exempted from service tax levy.

To promote digital payment methods banks along with wallet companies have been aggressively pitching with their respective offerings. Digital wallets like Paytm, Freecharge and Mobikwik have been big beneficiaries of the demonetisation move shoring up their wallet transactions multi-fold.