In a bid to develop the fintech and digital banking ecosystem in India, the government is looking at introducing tax subsidies for merchants who earn a certain proportion of their business revenues through digital payments, as opposed to cash. The Reserve Bank of India, in a detailed report, has said that the government may soon consider providing tax subsidies to merchants conducting business through digital payments.
The report was prepared by an inter-regulatory working group, which was formed in 2016 to study the entire gamut of regulatory issues relating to Financial Technology and Digital Banking in India.
To promote digital payments, it has urged the government to take steps similar to that of Singapore and Hong Kong.
The report also speaks about a need to develop a deeper understanding of various FinTech products and their interaction with the financial sector, before regulating this space.
It also calls for providing a conducive environment for the development of FinTech innovations and testing of applications/APIs developed by banks and FinTech companies.