Boost to digital payments from Union Budget 2021

The Union Finance Minister Nirmala Sitharaman gave the Annual Union Budget presentation for FY 2021-22. As a part of Budget 2021 announcements, A scheme is declare by the Finance Minister to promote digital payments in the country. In order to promote and enhance the digital payments, the FM introduces a scheme of Rs 1500 crore during her budget presentation on Monday.

The budget relates to instances of financial incentives to improve the digital payment system. However, the press copy has not been released by the government yet. The FM said, “I grant Rs 1,500 crore for a proposed scheme to give a boost to digital payment services, this will delivers the financial incentive to promote digital payment system.”

She added, “…The Government has now worked out the modalities and the NRF outlay will rise to Rs 50,000 crore in period of next five years. It will ensure the strengthening of the overall research ecosystem in the country with a focus to identify the national priority thrust areas,” she added.

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Digital Payments will get a huge boost:

The digital payment system in India encompasses a wide range of payment systems currently in operation. Some of the common ways to enhance the digital payment system includes Net banking, UPI payment and digital wallet payments. This decision will most likely supports the UPI-based system. This UPI-based system is likely to promote the Government’s own decision via its BHIM app.

However, This decision is likely to contradicts with NPCI’s restrictions on payments for UPI in India. In late 2020, The NPCI declared that all third-party UPI providers will execute up to 30% of transactions only. It also declares that they must identify a means for doing so starting on 1 January 2021.

The number of digital payments transaction are likely to be reduce by services such as PayTM, Google Pay and PhonePe. In Budget 2021, in a trail to enhance the domestic manufacturing. The government therefore increased the customs duty on smartphone components.

What are the new taxes?

The new taxes applies to components such as charging adapters, charging cables, headphones and various components of smartphones. Thus, the prices of smartphone is likely to rise again this year. It is a major possibility until smartphone brands do not plan to locate more in India.

The Union budget 2021-22 also ensure multiple new measures to promote creativity and R&D in the country in order to improve the country’s science environment as a whole. The digital payments sector is highly excited after the announcement of the Rs 1,500 crore scheme earlier today.