GST discounts for digital payments hit roadblock as states fail to find common ground

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The proposal to give discounts on Goods and Services Tax (GST) for digital payments has hit a roadblock as the states fail to find a common ground on the issue, reported Business Line.

“There are divergent views. Many states feel it is discrimination against those who are not using digital means,” a person familiar with the development told the paper.

In a bid to push digital payments, the government has proposed to provide a 2 percent concession on GST rate on Business to Consumer (B2C) supplies if the payment is done via digital mode subject to a ceiling of Rs 100 per transaction. The 2 percent benefit under this scheme may be extended in the form of a discount or cashback.

The aim of the scheme was to lure more customers to use digital payments. The scheme, which is now under consideration with the Finance Ministry, the Reserve Bank of India, the cabinet secretariat and the Electronics and IT Ministry, seems to face new challenges in its implementation.

With different rates, the government may have to redesign the system, which could be a tedious job, the report said. “All these issues make the proposal difficult, which is why it makes sense to defer the proposal for now,” a source told the paper.

A group of states’ finance ministers will be meeting within a fortnight to take a final view on the proposal. The issue will also be discussed in the next GST Council meet, scheduled for July 19.

The government has been looking at incentivising digital transactions for both customers and traders in the recent GST Council meetings so that it could find new measures to boost digital payments in the country. The proposal aims to boost digital transactions that will help the present government achieve its goal to make India a digital economy.

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