GST Council: The matter of 18% GST on online transactions less than ₹ 2000 is stuck, know what will happen now?

The GST Council meeting is being held on Monday under the chairmanship of Finance Minister Nirmala Sitharaman. Meanwhile, the most discussed topic was the announcement of levying 18% GST on payment aggregators like BillDesk and CCAvenue for small online transactions up to Rs 2,000 using debit and credit cards. But no decision could be taken on this and the matter has been sent to the Fitment Committee for now.

The ball reached the court of the fitness committee
Uttarakhand Finance Minister (Uttarakhand FM) Premchand Aggarwal, who attended the GST Council meeting, said that no decision has been taken yet in the 54th GST meeting regarding imposing 18 percent GST on small online transactions. He said that imposing this tax on payment aggregators on income from transactions less than Rs 2,000 was discussed, but no decision could be taken, after which the issue has been sent to the Fitment Committee, now the committee will submit a report to the council after giving deep consideration to the issue.

In fact, in the proposal to impose GST on online transactions worth less than Rs 2000, it was argued that payment aggregators work as intermediaries for transactions and hence they should not be classified as banks. Meaning, the fitment panel is in favor of imposing GST on them. Let us tell you that at present, payment aggregators have been exempted from GST on transactions worth less than Rs 2,000.

80% payments are less than Rs 2000
More than 80% of the total digital payments in India are of less than Rs 2,000. According to a notification issued by the government during demonetisation in 2016, payment aggregators were prohibited from levying tax on the services provided to merchants on these transactions. Aggregators currently charge merchants a fee of 0.5% to 2% per transaction. In such a situation, if GST is implemented on these small payments, then payment aggregators can pass on this additional cost to the merchants.

AAP had announced opposition to the proposal
Delhi government minister Atishi said during a press conference on Sunday just before the GST Council meeting that AAP will oppose two proposals during the GST Council meeting. One of these is the issue of GST on research grants given to educational institutions and the other is the proposal to impose GST on online transactions of less than Rs 2000.