Digital black money

Two days ago, my mobile phone’s battery-charger opted for voluntary retirement. I was suddenly left at the mercy of friends and some strangers to allow me to charge the phone. Yesterday, I decided it was finally time to gift my ailing phone an oxygen cylinder of its own. There is usually not much of a choice with chargers because the fashionistas promoting phones do not do the same with the much needed phone chargers. Therefore, all I wanted to procure was something that could keep my phone breathing. However, I was in for a surprise.

Digitisation and the need to stride towards a cashless economy have been promulgated vehemently by both financial experts as well the government. Demonetisation introduced the country to a new form of transaction: e-wallets. With the economy falling short of sufficient cash in circulation and automatic teller machines (ATMs) choosing to play villain, payment apps were the only saviours. Leading the pack of these e-payment applications is Paytm. The company clocked a growth of over 200 per cent between the months of November 2016 and March 2017. But what happened last night puts to question the very logic behind getting the cashless argument into play.

The store was not a usual setup but consisted of showcases on a six feet by four feet wooden pedal situated at the corner of a street in Mayur Vihar, New Delhi. With most other shops shut, I, rather sceptically, inquired about a Samsung charger to which he provided me options of a locally made product without warranty and an original one with warranty. On having decided to buy the latter I asked him for the bill which was going to be my proof for claiming free-repair if the charger breaks down within six months of buying. The reply was blatant, “we do not provide bills… we do not accept cards, you’ll have to pay either in cash or Paytm. We need to deal with taxes otherwise.” When was the last time you encountered such honesty.

The primary motive behind batting for cashless transactions was and continues to be expanding the tax net but with activities such as these, the entire game-plan comes to question. Paytm charges a 1.99 per cent transaction fee on every transaction made along with a 0.30 per cent service charge. Value added tax (VAT) that is levied on electronic products in Delhi at 5 per cent, which happens to vary from one state to another, is absent in the entire transaction process. Effectively, the charger that was on offer for Rs 400, would have worked out to Rs 420 if all the taxes were included and I was given a receipt.

“This is very common. None of the shops in the entire lane will give you bills,” said the shopkeeper rather casually. I was told that they make roughly Rs 5,000 per day (sales, not profits) and with Paytm keeping a ceiling of Rs 20,000 worth transactions in a month, the profit-making businessmen evidently has multiple Paytm accounts.

What is surprising is the way loopholes are created. It will be interesting to see how commercial transactions carried out through e-wallets to evade taxes are curbed.

Back to my story, when I insisted on paying through my debit card, the shopkeeper promptly replied that it would cost me an additional Rs 50 if I used the card to pay. As a law-abiding and taxpaying citizen, I landed up paying Rs 450 for my calling machine’s personal oxygen-cylinder.

rounak@outlookindia.com