New Delhi, Dec. 8 (PTI): Petrol, railway tickets and insurance policies of PSU companies will cost less if bought through debit or credit cards or other digital modes, the Centre said today while announcing a slew of measures to incentivise cashless payments.

It also waived service tax for payments up to Rs 2,000 made through cards and decided to do away with transaction fee for payment to central government departments and PSUs.

Finance minister Arun Jaitley announced that a discount of 0.75 per cent would be offered on purchase of petrol and diesel through either credit or debit cards, e-wallets and mobile wallets. Similarly, 10 and 8 per cent discounts will be offered in case of general and life insurance for buying new policy or paying premium online via PSUs websites.

Announcing 11 decisions to promote digital transactions, he said that monthly and seasonal suburban railway tickets purchased through digital mode would get 0.5 per cent discount from January 1. Online booking of railway tickets will get up to Rs 10 lakh of free accidental insurance cover. Those using digital mode to pay for railway catering, accommodation, retiring room will be entitled to discount of 5 per cent. He further said 10 per cent discount will be available on use of digital mode for paying for RFID or fast-tags for highway toll. The cost of these discounts, Jaitley said "will be borne by each of the organisation because most of these discounts are offered by the bodies which are run by central government or are PSU units".

"As of November 8, excessive amount of cash and a very very limited amount of digital transaction. There is a cost of transacting in cash and that cost of transacting in cash has to be borne by the economy, it is also be to borne by the political system.

"These are costs which are visible, there are cost which are invisible. Excessive cash can also lead a lot of malpractices and therefore in the long run we are using this also as an opportunity to move towards digitisation," he said.

The feedback from the industry is that the movement to the digital economy is "quite rapid," he said, adding that "this will certainly make India into a less cash economy".

Jaitley said: "It is the PSUs, which have taken this decision, the private sector has to decide in the world of competition. They are free to sell costlier petrol and face the consequences of the market.

The 10 per cent discount on using cashless modes to pay for RFID card/fast-tags used for highway toll payments will be available only till March-end. The discount on suburban train will begin from new year in Mumbai where commuters will get a maximum discount of Rs 10.

As much as Rs 1,800 crore worth of petrol and diesel is bought every day by nearly 4.5 crore customers and just 20 per cent of it is through cards, he said, adding that in the past one month, the percentage of digital mode of payment had doubled to 40 per cent.

Jaitley said the government through Nabard would extend financial support to eligible banks for deployment of two POS devices each at one lakh villages with population of less than 10,000.

Economic affairs secretary Shaktikanta Das said it was a game changing package of incentives announced by the finance minister to promote digital transactions and cashless economy.

"Big boost to greater transparency in our economy. Will curb generation of black money," he tweeted.

Rural regional banks and co-operative banks will issue Rupay Kisan Cards to 4.32 crore Kisan credit cardholders to enable them to make digital transactions at POS machines/Micro ATMs/ATMs.