GST Council Likely To Discuss 18% GST On Payments Apps On Transactions Upto Rs 2000

The 54th GST Council is set to convene in New Delhi on September 9th and is likely to discuss a proposal that seeks to clarify the imposition of an 18% GST on payment apps to facilitate digital payment transactions of less than Rs 2,000 through debit cards, credit cards, and other payment options, according to sources informed to CNBCTV18. Payment aggregators, who process digital payments using POS systems, net banking, and QR scanning, are currently exempted from GST on transactions under Rs 2,000.

"The fitment committee is of the view that payment aggregators such as PineLabs, Razorpay, etc, whose platforms are used to conduct digital payments-such as QR code scanning, POS machines, net banking, etc.-for transactions of less than Rs 2,000 via debit cards, credit cards, etc, will need to pay GST on the income earned from facilitating these transactions," referred to sources cited by CNBCTV18.

According to sources, the council-nominated fitment committee has been considering this clarification in-depth and came to the conclusion that there is unlikely to be any immediate effect on the public from this GST.

The sources further informed to CNBCTV18 that, "The fitment committee is of the view that these payment aggregators, as per the definitions in the law, are not banking companies, financial institutions, or NBFCs. Rather, they are intermediaries."

"The law states that all intermediary services should be liable for GST. Given this, the fitment committee has concluded that the services provided by payment aggregators for transactions up to Rs 2,000 through credit cards, debit cards, charge cards, or other payment cards over digital networks are not eligible for GST exemption," CNBCTV18 was told by sources.

However, in order to improve reporting accuracy and convenience for taxpayers, the government has announced three major modifications to the regulations governing the filing of GST returns, which will take effect in September 2024. Revisions to the thresholds, bank account authentication, and negative liability reporting are among these modifications.

According to recent rumours, the 54th GST Council meeting is anticipated to decide whether or not to remove the 18% GST that is applied to the total amount of term life insurance premiums. If this decision is put into effect, it will relieve a significant amount of the additional tax burden for insurance customers and lower the cost of term insurance policies for the masses.

A PTI report earlier indicated that the council will likely discuss the status report on online gaming tax as well as the current state of fake Goods and Services Tax registration. The study also stated that the Finance Act of 2024's modifications to the GST law may be approved by the council. The GST Council met for the first time on September 22 and 23, 2016, and has since conducted 53 meetings. The decisions made so far by the GST Council have had an immense impact on how the GST is implemented in India.