Government to waive service tax on debit & credit card transactions up to Rs 2,000

A notification to this effect is said to be tabled by Finance Minister Arun Jaitley in Parliament soon.

Government to waive service tax on debit & credit card transactions up to Rs 2,000

In a bid to make cashless transactions more attractive, Government will waive service tax on debit and credit card transactions of up to Rs 2,000 amid cash crunch following withdrawal of old Rs 500 and 1,000 banknotes.

Reports have said quoting sources that the government has decided to "exempt services by an acquiring bank to any person in relation to settlement of an amount up to Rs 2,000 in a single transaction transacted trough credit, debit card or other payment card service."


A notification to this effect is said to be tabled by Finance Minister Arun Jaitley in Parliament soon.

After November 8 announcement of demonetisation of old high value notes, there has been a cash crunch in the country as people have been making a beeline for banks and ATMs to withdraw new currency.

In such situation, government has been taking steps to promote cashless or digital transactions to take India towards a less-cash economy. Even recently the government asked banks to install additional 10 lakh PoS terminals by March 31 in different parts of the country.

Reports further said that the service tax notification of June 2012 will be amended to include exemption on credit and debit cards.

However, at present services provided by organisations such as United Nations and other international bodies are exempt from tax. A range of other services provided by arbitral tribunals, testing of newly developed drugs, educational institutions, trade unions, general insurance business and sports bodies, among others, too are exempt from the levy.