Service tax on card transactions up to Rs. 2,000 to go

Finance Minister Arun Jaitley will table in Parliament a notification that will exempt credit and debit card transactions up to Rs 2,000 from the levy of service tax.

The move is aimed at promoting electronic transactions following the demonetisation of high value currency notes from the midnight of November 8 onwards.

Mr Jaitley on Wednesday admitted that there was a cash shortage in the country, while experts have predicted it would take months for enough cash to be printed to replace the currency that was sucked out of the system due to the demonetisation announcement.

The notification to be tabled on Thursday seeks to amend a 2012 notification that delineated the services exempt from tax. These include services provided by arbitral tribunals, the testing of newly developed drugs, educational institutions, trade unions, general insurance businesses sports bodies, and services provided by international bodies such as the United Nations, among others.

Meanwhile, the Reserve Bank of India on Thursday made it optional for users to go through a two-factor authentication for online payments of up to Rs 2,000.

That is, users can opt out of providing a one-time password for such small transactions.