look news india
GST Council: The Goods and Services Tax Council (GST Council) meeting is scheduled to be held on September 9. In this, the proposal to impose 18% GST on payment aggregator companies like BuildDesk and CCAVN can be discussed. If this decision is taken, then they may have to pay GST even on payments of less than Rs 2000 through debit and credit cards.
At present they are exempted on small transactions. The GST fitment panel believes that these companies cannot be classified as banks.
80 percent of digital payments are less than Rs 2000
A report by CNBC TV18 claims that the GST fitment panel believes that GST should be imposed on payment aggregator companies. If this is the case, it will prove to be a big blow to all payment aggregator companies as currently more than 80 percent of digital payment transactions in the country are less than Rs 2000.
According to a government notification issued during demonetisation in 2016, payments groups were barred from levying taxes on services provided to merchants on small transactions.
At present, fees ranging from 0.5% to 2% are charged
Payment aggregators currently charge merchants 0.5 per cent to 2 per cent on each transaction. If GST is implemented, this additional cost may be passed on to merchants. Currently, payment aggregators do not pay GST on transactions less than Rs 2000. They facilitate payments through various digital payment systems such as QR codes, POS machines and net banking.
If this happens, small businesses will be badly affected. Most of their payments are less than Rs 2000. If a trader currently has to pay Rs 10 along with 1% gateway fee on a payment of Rs 1000, then after the implementation of GST, he will have to pay Rs 11.80.
GST will be applicable only on payments made through debit and credit cards
At present, UPI has become the most popular method of digital payment. In FY 2024, UPI transactions have grown by 57 percent year-on-year and crossed Rs 131 billion. UPI's share in digital payments has increased to more than 80 percent.
GST is applicable only on digital transactions done through debit and credit cards. Merchant Discount Rate (MDR) is not applicable on UPI transactions, so they will not be affected even after GST is implemented.
