so what's the point of demonetization, Einstein?
18% GST on Transaction below 2k
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Created by : quantum
By @abhishek012
GST Council may consider imposing 18% tax on payment aggregators for small transactions up to Rs 2,000:The Goods and Services Tax (GST) Fitment Panel has expressed the viewpoint that payment aggregators serve as intermediaries for transactions and therefore should not be classified as banks.
The Goods and Services Tax (GST) Council, which is scheduled to meet on September 9 for its next meeting, may consider levying an 18% GST on payment aggregators (PAs), such as BillDesk and CCAvenue, for small digital transactions up to Rs 2,000, via debit and credit cards.
A report from CNBC TV18 indicated that the Goods and Services Tax (GST) Fitment Panel has expressed the viewpoint that payment aggregators serve as intermediaries for transactions and therefore should not be classified as banks. Consequently, the fitment committee leans towards the imposition of GST on these Payment Aggregators (PAs). As per the existing regulations, payment aggregators are currently exempt from GST on transactions amounting to less than Rs 2,000.
More than 80% of the total digital payments in India consist of transactions below Rs 2,000 in value. As per a government notification issued during demonetisation in 2016, payments aggregators were refrained from levying tax on the services offered to merchants on these transactions.
Recently, the authorities have initiated efforts to collect taxes starting from the FY2017-18, coinciding with the implementation of the GST regime. This development is occurring amid speculation that the GST Council may provide clarification on the taxation of such transactions following its upcoming meeting next week.
Payment aggregators currently charge merchants a fee from 0.5% to 2% per transaction. The imposition of GST may result in them passing on this extra cost to merchants. Currently, payment aggregators are not liable to pay GST on transactions below Rs 2,000 as they facilitate a range of digital payment methods such as QR codes, POS machines, and net banking.
If 18% GST is imposed on small-value transaction, it could affect small businesses that depend on frequent low-value transactions. However, merchants engaged in high-value transactions, the proposed additional 18% tax on payment gateway fees may not pose a substantial financial burden.
Let's break down a transaction of Rs 1,000: with the current system's 1% payment gateway fee, the merchant incurs a charge of Rs 10. Following the implementation of the proposed GST, this fee would elevate to ₹11.80—representing a slight uptick, yet an increment that can accumulate rapidly across numerous transactions.
Boost to UPI transactions -
Unified Payments Interface (UPI) is currently the most popular form of digital payment, particularly for small-value transactions, which has resulted in a limited overall impact on digital transactions. In the fiscal year 2024, UPI experienced a remarkable 57% Year over Year (YoY) growth in transaction volume, exceeding 131 billion transactions.
It's noteworthy that UPI now contributes to more than 80% of the total retail digital payments in India. A critical point to consider is that the GST is applicable only to digital transactions conducted through debit and credit cards. As UPI transactions currently do not incur a Merchant Discount Rate (MDR), they will remain unaffected by the tax.
Consequently, for transactions under Rs 2,000, UPI continues to be a cost-free option for both merchants and customers, making it a highly appealing payment method.
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Seems it was a temporary relief, Get ready to pay more payment gateway charges on DC and CC.
This is worst if this gets implemented, because the charges will be passed on to end users hence UPI merchant payments might have increased charges hmmmm or the merchant will raise the product price because of these extra charges incurred for them due to PA/gateways
End users i.e customers i.e common people ARE THE ONES THAT BARE THIS COST AND AFFECTED
So we should just revert to cash.
Coin Chillar in my pocket is back baby
awesome, Now India can become 5 Trillion Economy very Soon 😃
and savings will become negative from 0 (ZERO) as more product cost because of transaction cost added in product cost
wow clap clap.. india become the SPENDING ECONOMY with free money for govt with every small transaction a person makes in India
wow SUCH A WONDERFUL INCOME FOR GOVT
guess 50 trillion economy is possible this way
On the contrary, will this incentiwise PPL to drop cards and use UPI more often?
As I read these charges are only for card txns and not UPI.
18% GST on the MDR, not Rs. 2000.
Media will do anything to trigger the normal people 😂
That must be on cc via upi i guess, not on normal.upi..
Normal.upi is and will be free
This is the worst government ever for middle class and salary people
The Goods and Services Tax (GST) Council, which is scheduled to meet on September 9 for its next meeting, may consider levying an 18% GST on payment aggregators (PAs), such as BillDesk and CCAvenue, for small digital transactions up to Rs 2,000, via debit and credit cards.
A report from CNBC TV18 indicated that the Goods and Services Tax (GST) Fitment Panel has expressed the viewpoint that payment aggregators serve as intermediaries for transactions and therefore should not be classified as banks. Consequently, the fitment committee leans towards the imposition of GST on these Payment Aggregators (PAs). As per the existing regulations, payment aggregators are currently exempt from GST on transactions amounting to less than Rs 2,000.
More than 80% of the total digital payments in India consist of transactions below Rs 2,000 in value. As per a government notification issued during demonetisation in 2016, payments aggregators were refrained from levying tax on the services offered to merchants on these transactions.
Recently, the authorities have initiated efforts to collect taxes starting from the FY2017-18, coinciding with the implementation of the GST regime. This development is occurring amid speculation that the GST Council may provide clarification on the taxation of such transactions following its upcoming meeting next week.
Payment aggregators currently charge merchants a fee from 0.5% to 2% per transaction. The imposition of GST may result in them passing on this extra cost to merchants. Currently, payment aggregators are not liable to pay GST on transactions below Rs 2,000 as they facilitate a range of digital payment methods such as QR codes, POS machines, and net banking.
If 18% GST is imposed on small-value transaction, it could affect small businesses that depend on frequent low-value transactions. However, merchants engaged in high-value transactions, the proposed additional 18% tax on payment gateway fees may not pose a substantial financial burden.
Let's break down a transaction of Rs 1,000: with the current system's 1% payment gateway fee, the merchant incurs a charge of Rs 10. Following the implementation of the proposed GST, this fee would elevate to ₹11.80—representing a slight uptick, yet an increment that can accumulate rapidly across numerous transactions.
Boost to UPI transactions -
Unified Payments Interface (UPI) is currently the most popular form of digital payment, particularly for small-value transactions, which has resulted in a limited overall impact on digital transactions. In the fiscal year 2024, UPI experienced a remarkable 57% Year over Year (YoY) growth in transaction volume, exceeding 131 billion transactions.
It's noteworthy that UPI now contributes to more than 80% of the total retail digital payments in India. A critical point to consider is that the GST is applicable only to digital transactions conducted through debit and credit cards. As UPI transactions currently do not incur a Merchant Discount Rate (MDR), they will remain unaffected by the tax.
Consequently, for transactions under Rs 2,000, UPI continues to be a cost-free option for both merchants and customers, making it a highly appealing payment method.
It may consider imposing 18% GST on payment aggregator fees for transactions made via debit and credit cards. Until now, such fees for transactions under ₹2,000 have been exempt.
This is worst if this gets implemented, because the charges will be passed on to end users hence UPI merchant payments might have increased charges hmmmm or the merchant will raise the product price because of these extra charges incurred for them due to PA/gateways
End users i.e customers i.e common people ARE THE ONES THAT BARE THIS COST AND AFFECTED
why? because
because the merchants will increase product price as they can't put it as transactions charges to pass on to end customers
so even if we have cash, Coin Chillar it wont help:) as the product price will be increased:) we have to pay the high price
so its dead end for end customers like us (we have no way to escape it)
My main question is where is the money going?
We're paying first world taxes for third world benefits.
Ladli behena ke liye accha swatch school banwa dete...
Its like stealing Re.1 from 100 crore people lol
and worst is Re.1 from 100 crore people 10 times daily (assuming we do 10 upi transactions daily)
dugna lagaan deyna padega....
Next:
Gst on income tax into the discussions...
really, i wont be surprised:) even if that happens IN THIS TAX TERR*RI*M (people call it)
gst (indirect tax) on income tax (direct tax) = triple taxation xD
Smiling gandhiji is back baby....
Hahahaha this I am sure Smiling gandhiji will turn into lunatic, if this type of tax Terror*sm is done in the lifetime of his
he went against tax just on salt, but now tax everywhere lol how many dhani march (salt march) is needed now i wonder
They are forcing to use upi lite or wallet transactions as it's becoming a burden for banks to maintain records of all small transactions. And after it's implementation bank will only record transactions above Rs 2000.
Consumers can also make transactions easily through this method as upi lite and wallet is more faster and convenient. It has higher transction success rate and doesn't depends on bank's server as it's kinda wallet to wallet transactions.
Upi lite is failure practically, I can keep change in purse why need upi lite???
which wallet you are talking about?? (even wallets have transaction to keep track and upi enabled wallet will also come under this upi transaction fees)
Kitna paisa milta hain yeh sab bakwaas karne ke , Adhi baat pakadne ka aur pura jor lagake afwah fhelane ka . Keyboard terrorism is also creeping .
Make a big splitwise group and switch on simply debts
Transfer Rs2001/- simple hai to avoid 18% gst
We're paying first world taxes for third world benefits.
Ladli behena ke liye accha swatch school banwa dete...
They are forcing to use upi lite or wallet transactions as it's becoming a burden for banks to maintain records of all small transactions. And after it's implementation bank will only record transactions above Rs 2000.
Consumers can also make transactions easily through this method as upi lite and wallet is more faster and convenient. It has higher transction success rate and doesn't depends on bank's server as it's kinda wallet to wallet transactions.