Payments Firms BillDesk, CCAvenue Hit With GST Notices For Transactions Under Rs 2,000: Report

Payments through Unified Payments Interface (UPI) and RuPay debit cards are exempted from merchant discount rates or transaction fees, as mandated by government orders

In India, over 80 per cent of digital payments are valued at less than Rs 2,000

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Major payment aggregators such as BillDesk and CCAvenue have reportedly received notices from the Goods and Services Tax (GST) authorities, requiring them to pay GST on the fees charged to merchants for processing digital transactions under Rs 2,000, according to The Economic Times Report.

“Yes, we have received a show-cause-cum-demand notice,” said Vishwas Patel, joint managing director of Infibeam Avenues, which runs payments processor CCAvenue, responding to ET’s queries. “Our teams have responded to the notice,” he said.

In India, over 80 per cent of digital payments are valued at less than Rs 2,000. Historically, payment aggregators such as BillDesk and CCAvenue have not levied tax on the fees they charge merchants for processing these small transactions, following a government notification issued during the 2016 demonetisation period.

However, GST authorities are now seeking to collect taxes retroactively from fiscal year 2017-18, when the Goods and Services Tax (GST) regime was first introduced. This development coincides with speculation that the GST Council may clarify taxation for such transactions following its meeting next week.

The issue persists specifically in debit cards, credit cards, and net banking transactions. In contrast, payments through Unified Payments Interface (UPI) and RuPay debit cards are exempted from merchant discount rates or transaction fees, as mandated by government orders.

Vishwas Patel of CCAvenue, who also serves as the chairman of the Payments Council of India, stated that the industry body has contacted the finance ministry and other relevant authorities to address the issue, as per the report.

Given the payments industry's significant role in advancing the government's Digital India initiative, Patel expressed optimism that the finance minister and the GST Council would address this issue. He highlighted that the industry has enabled millions of Indian MSMEs to accept digital payments and advocated for adopting UPI payments at no cost to support the government's digitisation efforts.