No consensus on GST concession for digital payments

Our Bureau New Delhi | Updated on May 11, 2018 Published on May 11, 2018

State Finance Ministers to meet again in 10 days

The Group of State Finance Ministers, which met here on Friday to decide on providing a 2 percentage point concession in the GST rate for digital payments, could not reach a consensus.

“We need some more data to arrive at a decision,” Sushil Kumar Modi, Deputy Chief Minister of Bihar and Chairman of the Group of Ministers, told media persons after the meeting.

The second and final meeting is expected in 10 days. Amit Mitra, West Bengal Finance Minister, said international practices need to be studied. Punjab Finance Minister Manpreet Singh Badal suggested creating negative and positive lists for giving concessions.

The Minister’s panel was formed after the GST Council failed to take a decision at its May 4 meeting. The proposal envisages “a concession of 2 percentage point in the GST rate on B2C (business to consumer) supplies for which payment is made digitally (1 percentage point each from applicable CGST and SGST rates, subject to a ceiling of ₹100 per transaction.” This scheme, however, will not be available to registered persons paying tax under the composition scheme.

Once this incentive kicks in, consumers will be offered two prices: One with the normal GST rate for cash purchases, and the other with GST lowered by 2 percentage points for digital payments. Thus, if the GST rate for the supply a goods/service is 18 per cent, and if payment is made digitally, the applicable GST will be 16 per cent.

The payment mode can be divided into two. The first comprises RTGS, NEFT, IMPS (Immediate Payment Service), NACH (National Automated Clearing House), NETC (National Electronic Toll Collection) and Closed Loop. This is not widely used. The second group, comprising UPI/BHIM/USSD, RuPay, AEPS, BBPS, debit/credit cards, m-wallets, PPC, internet banking, and mobile banking modes, is more popular.

Revenue implication

Based on the IT Ministry data for 2017-18, digital transactions via the second group totalled 1,329 crore, worth ₹135.4 lakh crore. If payment for 40 per cent of all purchases is made digitally, and the average size of the transaction on which the concession is allowed is ₹1,400, the revenue implication would be ₹1,50,00 crore.

The government feels the loss in tax revenue may be made up with better compliance.

Published on May 11, 2018

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!


Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.