Money & Banking

Domestic money transfer: BCFI wants govt to do away with GST

K Ram Kumar Mumbai | Updated on December 21, 2020

Migrant labourers have to pay GST for sending money through BCs

The Business Correspondent Federation of India (BCFI) wants the government to do away with the Goods and Service Tax (GST) imposed on senders, predominantly migrant workers, when they make a domestic money transfer to a rural area through Business Correspondents (BCs).

Currently, BCs charge the senders 1 per cent of the money to be transferred as transaction charge. This includes 18 per cent GST.

BCFI seeks incentives for correspondents for six months

Sunil Kulkarni, CEO & Head, BCFI, said on the one hand one segment of the population is fully banked, with the tech-savvy among them accessing online funds transfer services such as the National Electronic Funds Transfer (NEFT) free of charge, but on the other hand, migrant labour in cities/ urban areas have to pay GST for sending money through BCs to their families in rural areas.

BharatPe, third-largest player in UPI payment acceptance space

In this regard, he emphasised that GST paid by the migrant labour goes to the government, whereas the rich, the middle class, and the tech-savvy young generation avail online money transfer free of charge as they can access NEFT.

UPI for digital payments

The latter can also access the Unified Payment Interface (UPI) service for person-to-person digital payments, which according to the government, should be offered free of charge by banks.

Currently, a migrant worker in Mumbai sending ₹3,000 to his family in Odisha via a BC agent, has to pay 1 per cent as transaction charge. Within this ₹30, the GST component is ₹5.40.

If this transaction is exempted from GST, the charge that the sender will have to pay will come down to ₹24.6.

WhatsApp processes 3.1 lakh UPI payments

The Federation, which is the national federation of Corporate BCs and Agent BCs in India, is of the view that at least the GST burden on the sender in the transaction fee on DMT via BCs should be taken away.

The reason: money is usually transferred by a sender from a city to a rural area to support a family. BCs are retail agents engaged by banks for providing banking services at locations other than a bank branch/ATM.

As of March-end, the total banking outlets in villages stood 5,41,175. The urban locations covered through BCs stood at 6,35,046, according to Reserve Bank of India’s annual report for 2020.

Published on December 21, 2020

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor

You May Also Like