Incentives to Kirana outlets to boost POS equipment sale
POS
ram@justransact.com
23-02-2015 00:00:00
Incentives to Kirana outlets to boost POS equipment sale
The Government is planning a mega scheme with incentives for the country’s over 14 million mom-and-pop(kirana stores) in the unorganised retail sector and facilitate more consumers to adopt digital payment systems, according to finance ministry sources.

To give more reach to its flagship schemes Jan DhanYojana and Aadhaar card issuance programme to make India a ‘less-cash’ economy, the government is planning a series of incentives which will have its impact on retail sector.

The incentives could include exempting kirana stores from tax/cess when sales to customers involve small-value payments (of, say, Rs 1,000) electronically via debit/RuPay cards (through point-of-sale devices) or through mobile-to-mobile payments, a report from Financial Express quoting finance ministry sources, said.

This will not only bring more kirana stores under the tax net and to the organised sector, but these retailers will also gain as delays and costs associated with the cash-based system will be eliminated.

According to industry sources, the tax/duty incentives are expected to boost the sale of PoS devices, especially low-cost mobile-PoS equipment, to help facilitate doorstep card payments.

India’s retail sector is estimated to nearly double to over $950 billion by FY19.

To encourage more consumers to choose e-transactions, a separate deduction limit is being thought of for debit/RuPay card-based transactions of up to a specified limit (say, Rs 50,000 per year) per person, the report said.

The Centre is also mulling to ask the RBI to reduce transaction fee for merchants who pay to banks for debit card transactions.Currently, the fee for transactions uptoRs 2,000 is 0.75% of the transaction amount, and for amounts over Rs 2,000, it is a maximum of 1% of the transaction amount, the report said.

Besides, expenses incurred by companies following digital payment initiatives and e-transactions, which now include newly joined poor in the banking system and kirana stories, may be treated as a corporate social responsibility (CSR) activity.

As per the National Payments Corporation of India (NPCI), the number of non-cash transactions per person (in India) stands at just 6 per year. Only a fraction of retailers in India have card payment acceptance infrastructure.

As part a proposed ‘national retail policy’, the government is also considering according retail trade ‘industry’ status for better access to bank finance as well as their demand for inclusion of micro/small retailers in the priority sector lending norms, the report further stated.

-K Ramanathan ram@justransact.com


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