The card industry has made urged the information technology (IT) ministry to abolish the 16 per cent countervailing duty and 4 per cent special additional duty on the final sale of electronic data capture (EDC) terminals.
The representation was made by the Visa Acceptance Forum, formed by member banks and Visa International.
The reduction in duties is necessary to achieve the objective of developing the industry through the development of acceptance infrastracture. Also the EDC terminals have to be imported, the forum told the IT ministry.
According to convenor of the forum and Visa International's country manager, Santanu Mukherjee, acceptance is critical to the growth of the industry. A big hindrance to the growth in the spends of cards is the absence of EDC terminals as import duty on the terminal is as high as 40 per cent. Due to the high cost, banks do not find it viable to install a large number of EDC terminals.
Of the 1,00,000 card-accepting merchants in the country which are pegged at 1,00,000 only 30,000 have EDC terminals and ma majority of them are in the metros. The number of cards in the industry has been growing at over 25 per cent year on-year, but spends have not increased proportionately.
The debit card base has reached 1.6 million in a little over two years and is growing at a phenomenal 150 per cent. The credit card base in the country is at around 6.5 million and the industry is growing at 30 per cent.
Last year the government had levied increased the woes for the credit card industry by levying a 5 per cent service tax. This tax was levied on all fees and finance charges. According to industry participants, due to this measure many of the customers who had multiple cards have given back some of their cards.
