Ministry of Corporate Affairs has authorised just five banks (Indian Bank, HDFC, ICICI, PNB, UBI and SBI) for collection of MCA21 fee. By implication, only the account holders of these banks can avail Internet banking facility. Further, payment via challan can only be made in the authorised branches of these above five banks.
COVID has brought forth new and unforeseen challenges before the government and the people. Each sector has been hit but the worst is being faced by the small scale units. This, in turn, has impacted employment. How to get the economy back on track? There are no easy answers. There is indeed grave risk of inflation if the government prints more currency as the poorest are hit the most by inflation. One of the options, however, is to use COVID as an opportunity to streamline processes and leverage such developments as have the potential of reviving economic activity. This doesn’t cost money.
Everyone agrees that technology can be a game-changer. The Prime Minister has time and again emphasized the need of technology in various spheres of governance and in delivery of services. In tune with this approach, digital initiative in the country, especially the one in financial sector, was also at the behest of the Prime Minister. This initiative has started paying dividend. Digital Index of India has moved up substantially making India one of the most digitally connected country in world. This has been more pronounced in payment space where India has become a world leader in last five years. The effort should now be to take it to the next stage and enable even the smaller financial entities to come on board. This is possible and would be of utmost benefit to units belonging to the beleaguered Medium, Small Scale and Micro Enterprises sector
At present, 25 banks are linked to enable their customer to pay their Income Tax through internet banking or by cash deposit at branches of these Banks. However, customers of only 6 banks are permitted to pay through credit cards and debit cards issued by these banks and no payment can be made by UPI.
For Goods and Services Tax (GST) too, only 25 banks are linked to enable their customer to pay by internet banking or by cash deposit at branches of these Banks. However, ironically, no one is permitted to pay by using any credit card and debit card .Payment can’t be made by UPI either.
Ministry of Corporate Affairs has authorized just five banks (Indian Bank, HDFC, ICICI, PNB, UBI and SBI) for collection of MCA21 fee. By implication, only the account holders of these banks can avail internet banking facility. Further, payment via challan can only be made in the authorized branches of these above five banks.
Customers of only 17 banks are permitted payment through credit cards and debit cards issued by these banks. RuPay cards are not accepted. In this case too, payment can be made by UPI.
India has more than 2000 banks, with over 900 million debit cards and over 100 million credit cards. If a person does not have account in one of these banks, he has to go to one of these bank and furnish cash or cheque and then pay.
All e-commerce sites, even in the private domain, are enabled to accept all debit cards and credit cards including global cards. NPCI has issued of RuPay that has emerged as our national card. It has over 700 million customers. Other issuers are Master Card and Visa. As a consequence of the existing protocol for payment, all NRI and PIO find it hard to pay taxes on-line. Practice all over the world is that a person or any entity can use debit card or credit card to make payment of taxes to government.
To overcome the handicap arising out of only limited number of instruments and banks being allowed to carry out the aforementioned transactions, many large business entities in India maintain accounts in banks which are authorized to carry out such transactions while their main banking is with a bank which is not permitted to process these payments. The biggest sufferers are the MSME as they find it difficult to maintain and manage multiple bank accounts.
There is another associated problem. No e-commerce site charges any fee for payments. However, as per RBI guidelines, Banks levy a fee are paid for every transaction relating to such payments.
The existing arrangement that leads to non-digital transaction results in unnecessary visits to bank branches and paper work (as a consequence of issue of cheques and documentation) which not only has additional financial cost but is also environment un-friendly.
Each collector of payment, in this case CBDT, MCA and GST has bank accounts approved by CGA or GST Council. Any payment made by any method-Internet Banking, Debit card, Credit card and UPI will be credited to one of these account only. Hence no fresh account approval is needed from CGA or GST council to enable all cards and UPI
This will require integration of these sites with those of card issuers namely NPCI, Master card and Visa. It should not be a difficult proposition for these agencies to do this back-end integration as this has been done by even small e-commerce companies
Digital payment is an integral part of ease of doing business. Hence, it would be worthwhile mandating for all the payments received by various agencies to accept all debit and credit cards of all the banks and payments by UPI. It will not only enable swifter transactions but will help real-time accounting and elimination of paper work, one of the objectives outlined for going digital. It will also induce even smaller entities to go digital. Above all, this will fulfil PM’s dream of taking digital transactions and benefits of digitalization to masses.
Anil Swarup has served as the head of the Project Monitoring Group, which is currently under the Prime Minister’s Office. He has also served as Secretary, Ministry of Coal and Secretary, Ministry of School Education.
