Suspense Crime Sach Ka Dam
GST on Online Transaction: A case of levying 18% GST on low-value payments made through debit and credit cards has come to light. Major payment aggregators like BillDesk and CCAvenue have received notices from the Goods and Services Tax (GST) authorities demanding GST on the charges levied on merchants for processing digital transactions of less than Rs 2,000. This information has been given in an ET report.
More than 80% of all digital payments in India are worth less than Rs 2,000. Following a notification issued during demonetization in 2016, payment aggregators were exempted from tax on services provided to merchants on such transactions. The authorities are now demanding tax from the financial year 2017-18, when the GST system was introduced.
How online transactions increased between July 2018 and July 2024
How transactions increased in 6 years.
Image Courtesy : BCCL
This news is coming at a time when there is talk that the GST Council is going to clarify about imposing tax on such transactions after its meeting next week.
Big companies in the payment industry
While ET could not ascertain the exact amount demanded by GST, CEOs of payments firms estimated that companies that process billions of dollars worth of transactions annually may have to shell out a few hundred crore rupees in taxes for all these years. Major players in the payments industry include Pine Labs, Paytm, Razorpay, Cashfree, BillDesk, and CCAvenue.
Usually, a portion of the tax is collected from merchants during the processing of their fees. He said that if the government is demanding GST from payment companies, it means that they will have to collect it from the merchants who are the source of payments.
This is only applicable to transactions made through debit cards, credit cards, and net banking. Unified Payments Interface (UPI) and RuPay debit card payments are offered with zero merchant discount rate or transaction fee, as per the government mandate.
A decision may be taken in the GST Council meeting on September 9
If the September 9 GST Council meeting makes it clear that this exemption is not available to payment aggregators (PAs) and merchants going forward, it will be a step backward. But if the GST Council decides that all transactions below Rs 2,000 will be charged GST as before from 2017, it will definitely be a blow to merchants and PAs.
