GST Proposal For Online Transactions Under Rs 2,000 Sent To Fitment Committee: Uttarakhand FM

GST Council Meeting: Currently, aggregators charge merchants between 0.5% and 2% per transaction. With the introduction of GST, these costs could rise, increasing the financial burden on businesses

Union Finance Minister Nirmala Sitharaman and MoS Pankaj Chaudhary at the 54th meeting of the GST Council, in New Delhi, on Monday.

Source : PTI

GST Council Meeting: Uttarakhand Finance Minister Premchand Aggarwal clarified that no decision has been made regarding the imposition of GST on small digital transactions at the 54th GST Council Meeting, as per news sources. Addressing media queries, Aggarwal said, "No decision has been taken on the recommendation to levy 18 per cent GST on payment aggregators for transactions under Rs 2,000."

Payment aggregators, which handle online transactions for businesses, may soon be subject to new tax rules. The GST fitment committee, consisting of central and state revenue officials, has proposed that these entities be taxed. The committee argues that, unlike banks, payment aggregators act as intermediaries in card transactions and should, therefore, be liable for GST.

The final decision on the matter is expected to be taken during the 54th GST Council Meeting, which will be chaired by Finance Minister Nirmala Sitharaman. Concerns have been raised that this potential tax could negatively affect merchants and small businesses, as payment aggregators are likely to pass on the added cost to them. Currently, aggregators charge merchants between 0.5 per cent and 2 per cent per transaction. With the introduction of GST, these costs could rise, increasing the financial burden on businesses.

At present, transactions under Rs 2,000 via digital payment methods — such as QR codes, point-of-sale (POS) machines, and net banking — are exempt from GST. This exemption was introduced in 2016 following the demonetisation of Rs 500 and Rs 1,000 notes.

Meanwhile, Delhi Finance Minister Atishi announced on Monday that the state will oppose the Centre's proposal to impose GST on online transactions under Rs 2,000, citing concerns about the additional burden it would place on start-ups.

Atishi pointed out that they would oppose the imposition of GST on research grants at the GST Council meeting the same day.

"Several important issues will be discussed at the GST Council meeting, and the foremost is GST on research grants. Show cause notices have been sent to major educational institutions, including IIT Delhi and Punjab University, which is unjust. Research is an investment in the country’s development," she told PTI.