You won’t have to pay service tax on debit/credit card transactions of up to Rs 2,000

In a bid to promote cashless economy and digital transactions, the government is going to waive off service tax on debit and credit card transactions of up to Rs 2,000.

Presently, 15% tax is levied on these transactions. India is facing cash crunch since demonetisation was announced since Nov 8 as people are lining up outside banks and ATMs to withdraw new currency notes.

A notification to this effect will be tabled by Finance Minister Arun Jaitley in Parliament.

Recently, the government asked banks to install additional 10 lakh PoS terminals by March 31 in different parts of the country.

The service tax notification of June 2012 will be amended to include exemption on credit and debit cards, the sources added.

As of now, 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.