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GST Council may consider imposing 18% tax on payment aggregators for small transactions up to Rs 2,000

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this move will kill Small Business Owners aids the corporate giants, End user will be conscious about these extra charges especially with smaller merchants. Gradually they bail out from ordering from those sites, so many small businesses using RazorPay for accepting payments, Now this 18% tax & other pre existing pain in the 🫏 taxes will put the final nail on the coffin. Both End user & The merchant will suffer. End user either have to accept these brainless taxes or Miss their tailored products. Merchant either have to observe the extra tax or risk his customer base by passing the tax on them(this will happen mostly). India is very price sensitive market & the profit margins are very thin for small businesses, Now this blood leeching taxes are gulping these small profits also.

Irony is even after direct & so many indirect taxes, we don’t have proper infrastructure No Better health care, malnutrition, connectivity & people with no civic sense & tons of educated illiterates. It’s getting hard & hard for small businesses to compete with corporate giants it’s like putting a torch upon Sun
 
Abhishek012 said:

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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It's simple. The govt is hell bent on destroying credit and debit card ecosystem by keeping on giving unfair advantagse to UPI.
 
CosmicCat said:
Border pe jawaan lad rahe hain aur tum 18% GST bhi nahi de sakte? Very shameful.

/s
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Yes, you’re absolutely right. We are indeed "very shameful" because the 18% GST and all the other taxes we pay have been so effectively utilized, haven’t they?
  • Just look at the incredible facilities and weapons provided to our jawans! Oh wait...
  • And who can forget the world-class education and healthcare we all enjoy, thanks to that huge allocation of ₹1.48 lakh crore? Truly top-notch. 🤣
  • Our infrastructure is so robust that bridges and airport terminals have the decency to collapse within just a month or a year. Such efficiency!
  • The protection provided to women in this country? Clearly, a shining example for the world.
  • Sports and athletes are thriving with the generous ₹900 crore allocation. We’re practically winning gold at every event!
  • Basic facilities in schools and hospitals? Absolutely flawless. (Or at least, in some alternate universe.🤣)
  • And the purchasing power of the common people? It’s soaring… straight into the ground.
  • Balancing wealth and income disparity in the country? We’ve absolutely nailed it… or maybe not. We’ve failed miserably there.
The issue isn’t paying 18% GST for the nation’s development; it’s whether we’re actually seeing the benefits of what we pay. Are we getting the quality of life we’re promised?

Our government seems to love product-linked incentives but forgets that employee-linked incentives might be a good idea too. Sure, aiming for a $5 trillion or $10 trillion economy sounds fantastic, but maybe, just maybe, it should be done by actually developing infrastructure, improving students' skill sets, and boosting purchasing power. Encouraging people to earn and spend more would grow the economy—not taxing them into submission.

And yes, while promoting UPI is wonderful, maybe we shouldn’t kill off other payment methods like credit cards. Variety is the spice of life.

To be honest, we’re not getting anything from the above-mentioned promises. It's a cycle: if they impose GST on aggregators like BillDesk, vendors and merchants just increase prices or slap on a platform fee. This ultimately reduces demand, and guess who ends up bearing the brunt of it all? The end user, with higher prices. So, the cycle continues, with the common citizen getting squeezed at every turn.
 
Last edited:
Fini7777 said:
Yes, you’re absolutely right. We are indeed "very shameful" because the 18% GST and all the other taxes we pay have been so effectively utilized, haven’t they?
  • Just look at the incredible facilities and weapons provided to our jawans! Oh wait...
  • And who can forget the world-class education and healthcare we all enjoy, thanks to that huge allocation of ₹1.48 lakh crore? Truly top-notch. 🤣
  • Our infrastructure is so robust that bridges and airport terminals have the decency to collapse within just a month or a year. Such efficiency!
  • The protection provided to women in this country? Clearly, a shining example for the world.
  • Sports and athletes are thriving with the generous ₹900 crore allocation. We’re practically winning gold at every event!
  • Basic facilities in schools and hospitals? Absolutely flawless. (Or at least, in some alternate universe.🤣)
  • And the purchasing power of the common people? It’s soaring… straight into the ground.
  • Balancing wealth and income disparity in the country? We’ve absolutely nailed it… or maybe not. We’ve failed miserably there.
The issue isn’t paying 18% GST for the nation’s development; it’s whether we’re actually seeing the benefits of what we pay. Are we getting the quality of life we’re promised?

Our government seems to love product-linked incentives but forgets that employee-linked incentives might be a good idea too. Sure, aiming for a $5 trillion or $10 trillion economy sounds fantastic, but maybe, just maybe, it should be done by actually developing infrastructure, improving students' skill sets, and boosting purchasing power. Encouraging people to earn and spend more would grow the economy—not taxing them into submission.

And yes, while promoting UPI is wonderful, maybe we shouldn’t kill off other payment methods like credit cards. Variety is the spice of life.

To be honest, we’re not getting anything from the above-mentioned promises. It's a cycle: if they impose GST on aggregators like BillDesk, vendors and merchants just increase prices or slap on a platform fee. This ultimately reduces demand, and guess who ends up bearing the brunt of it all? The end user, with higher prices. So, the cycle continues, with the common citizen getting squeezed at every turn.

My friend, my post might hurt you. If so, my apologies. But before making such statements, think for yourself—are we really getting what we pay for?
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Wonderful comment! Truly agree with every point! However, apparently, you didn't notice the "/s" at the end of my comment as well as the hyperlink to its meaning. An "/s" at the end of a statement denotes "Sarcasm." 😃
 
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CosmicCat said:
Wonderful comment! Truly agree with every point! However, apparently, you didn't notice the "/s" at the end of my comment as well as the hyperlink to its meaning. An "/s" at the end of a statement denotes "Sarcasm." 😃
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Ohh I haven't noticed that🤣
 
Ak Singh said:
Pehle bolte hai koi digital payment like credit and debit card use nhi karta,
Jab koi karta hai toh bolte hai jyada use ker rhe hai. Chalo charge lga dete hai khud automatic band ho jayega...🙂
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Rupay CC phle hi bahut kam log accept kar rahe ab usme se bhi kam ho jayenge.
 
SmartyAadi said:
Most wallets charge you extra if you wanna load using CC. Examples are Amazon Wallet, Mobikwik etc.

Also, many cards don't reward wallet loads so won't make much sense.

TBH, I don't understand why this country's taxation is always on small merchants and middle class.
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Cos the volume of tax collection will be more. May be govt applying Anniyan film logic when Vikram kills chockalingam railway contractor
 
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