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 have been given exemption on small transactions. The GST Fitment Panel believes that these companies cannot be placed in the category of banks.

80% of digital payments are worth less than Rs 2,000

A report by CNBC TV18 claims that the GST fitment panel believes that GST should be imposed on payment aggregator companies. This will prove to be a big blow to all payment aggregator companies because currently more than 80 percent of the total digital payment transactions in the country are worth less than Rs 2000. According to a government notification issued during demonetisation in 2016, payment aggregators were barred from levying tax on services provided to merchants on small transactions.

At present, fees ranging from 0.5% to 2% are charged

Payment aggregators currently charge 0.5% to 2% on every transaction from merchants. If GST is implemented, they can pass on the additional cost to merchants. Currently, payment aggregators do not pay GST on transactions less than Rs 2000. They provide payment facilities through many digital payment systems like QR code, POS machine and net banking. If this happens, it will have a bad impact on small businessmen. Most of their payments are less than Rs 2000. If a businessman currently has to pay a fee of Rs 10 along with 1% gateway fee on a payment of Rs 1000, then after GST, he will have to pay Rs 11.80.

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GST will be applicable only on payments made through debit and credit cards

Currently, UPI has become the most popular method of digital payment. In the financial year 2024, UPI transactions have increased by 57 percent on an annual basis and have crossed 131 billion. UPI’s share in digital payments has exceeded 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 there will be no impact on them even after GST is imposed.

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The post GST Council: You may have to pay 18% GST on payments up to Rs 2000. See Details Here first appeared on Rightsofemployees.com.