Skip to main content

GST Sops for Digital Payment Push

By
GST Sops for Digital Payment Push
GST Council may discuss proposal tomorrow, has option of incentivising merchants & customers
A year after demonetisation, India is getting ready to give digital payments yet another push.It could consider providing incentives in the goods and services tax (GST) regime for payments that are settled electronically .The GST Council meeting on Friday is likely to consider a proposal in this regard, a senior government official told ET.“There is a thinking that digital transactions need to be incentivised... The council will look at what could be done,“ the person said.
The council could take up the proposal along with steps to cut GST on some items from the top 28% rate besides easing the compliance burden for businesses.As far as digital payments are concerned, the council has the option of incentivising merchants and customers. Under the proposal, benefits in terms of credit or exemption could be provided within central and state GST to encourage such transactions.
A merchant could, for instance, get credit for digital payments that can be adjusted against GST liabilities. Consumers, on the other hand, could be incentivised through lower tax when payments are made digitally . The government feels built-in incentives in the tax structure could help in making digital transactions more acceptable to customers and merchants as the benefit is visible immediately.
Another possible change could be through the merchant discount rate (MDR), a transaction charge levied for facilitating digital transactions, which is seen as a hurdle in the way of digital payments. The MDR on credit cards runs from 0.25% to 1%. There's no limit on MDR for credit cards.
The Narendra Modi government is keen on pushing digital transactions and had set up a committee under the chairmanship of Andhra Pradesh chief minister N Chandrababu Naidu to discuss strategies to achieve this.This panel had suggested abolishing MDR charges.
The usage of cards for purchases, mobile wallets and newer options such as the Unified Payments Interface (UPI) have been increasing after demonetisation in November last year sucked out 86% of cash in circulation.Card transactions for purchases rose from 230 million in October 2016 to over 380 million in August this year. The rise in mobile wallet transactions has been steeper over the same period, from 100 million to over 225 million.
The government had announced incentives for digital payments to encourage adoption. Payment by digital means for fuel purchases is rewarded by a cashback incentive.
The Economic Times, New Delhi, 09th November 2017

Comments

Post a Comment

Popular posts from this blog

Govt’s gamble on GST cuts: What do the bond and currency markets signal?

By
  It’s not just humans who suffer from cognitive biases; markets do too. Interestingly, different financial markets exhibit distinct biases, each interpreting events through its own prism of prejudice. Take the recent announcements on GST reforms: equity markets have chosen to view them through the lens of growth, while bond and currency markets are focusing on potential macroeconomic risks—fiscal pressures and current account challenges. So, which lens captures the true pulse?Equity markets may be right in expecting GST reforms to revive consumption, which has remained lacklustre for a while. But the key question remains—will this revival come at the cost of broader macro stability?It is well known that consumption stocks have rallied since the GST rationalisation announcement. But what about bond markets? What signals are they sending since this rejig was announced from the ramparts of the Red Fort?The signs aren't encouraging. Bond prices have slumped and yields have surged sinc...
Post a Comment
Read more

Luxury carmakers urge clarity on GST rates to boost festive season sales

By
  A clear picture regarding new GST rates at the earliest will help the overall auto industry, including the luxury car segment, to regain momentum in the ongoing quarter, which generally sees enhanced sales on account of the festive season.The high-powered GST Council, chaired by Finance Minister Nirmala Sitharaman, will meet on September 3-4 to discuss moving to a two-slab taxation.In an interaction with PTI, BMW Group India President and CEO Hardeep Singh Brar said the recent speculation about the change in GST rates has caused uncertainty in the minds of consumers.Consumer interest and demand is strong, but they (prospective buyers) have adopted a wait-and-watch approach, and this delayed decision-making is impacting new vehicle sales at a certain level, he noted."Expediting clarity on GST rates is essential to get back to speed and ensure the auto sector's contribution to economic growth during this quarter is robust," Brar stated.He also hoped that the sustainable p...
Post a Comment
Read more

Sebi proposes tighter norms for green bond third-party reviewers

By
  Sebi on Friday said it has proposed to tighten the norms to appoint independent third-party reviewers or certifiers for green debt securities to align them with requirements for other ESG-linked bonds.In a draft circular, Sebi said that the current norms for green bonds, introduced in February 2023, lack detailed requirements around reviewer independence, conflict of interest mitigation, and disclosure standards that are now in place for other ESG-linked securities under a June 2025 circular.The regulator's latest proposal seeks public comments on a revised framework that would bring parity by incorporating comprehensive criteria for third-party certifiers of green bonds on non-convertible securities.Under the proposed norms, issuers of green debt securities will need to appoint reviewers who are independent of their management, directors, and key managerial personnel. These reviewers will be remunerated in a way that prevents any conflicts of interest and possess relevant expert...
Post a Comment
Read more