The Group of State Finance
Ministers, which met here on Friday to decide on providing a 2
percentage point concession in the GST rate for digital payments, could
not reach a consensus.
"We need some more data to arrive at a
decision," Sushil Kumar Modi, Deputy Chief Minister of Bihar and
Chairman of the Group of Ministers, told media persons after the
meeting.
The second and final meeting is expected in 10 days. Amit
Mitra, West Bengal Finance Minister, said international practices need
to be studied. Punjab Finance Minister Manpreet Singh Badal suggested
creating negative and positive lists for giving concessions.
The
Minister’s panel was formed after the GST Council failed to take a
decision at its May 4 meeting. The proposal envisages "a concession of 2
percentage point in the GST rate on B2C (business to consumer) supplies
for which payment is made digitally (1 percentage point each from
applicable CGST and SGST rates, subject to a ceiling of Rs.100 per transaction." This scheme, however, will not be available to registered persons paying tax under the composition scheme.
Once
this incentive kicks in, consumers will be offered two prices: One with
the normal GST rate for cash purchases, and the other with GST lowered
by 2 percentage points for digital payments. Thus, if the GST rate for
the supply a goods/service is 18 per cent, and if payment is made
digitally, the applicable GST will be 16 per cent.
The payment
mode can be divided into two. The first comprises RTGS, NEFT, IMPS
(Immediate Payment Service), NACH (National Automated Clearing House),
NETC (National Electronic Toll Collection) and Closed Loop. This is not
widely used. The second group, comprising UPI/BHIM/USSD, RuPay, AEPS,
BBPS, debit/credit cards, m-wallets, PPC, internet banking, and mobile
banking modes, is more popular.
Revenue implication
Based on the IT Ministry data for 2017-18, digital transactions via the second group totalled 1,329 crore, worth Rs.135.4
lakh crore. If payment for 40 per cent of all purchases is made
digitally, and the average size of the transaction on which the
concession is allowed is Rs.1,400, the revenue implication would be Rs.1,50,00 crore.
The government feels the loss in tax revenue may be made up with better compliance.