The Goods and Services Tax (GST) Council is reportedly yet to resolve whether to impose an 18% GST on income generated from transactions below ₹2,000 by payment aggregators. This issue, which could affect smaller online payments, has now been referred to the GST fitment committee for further examination, according to Uttarakhand Finance Minister Premchand Aggarwal.
During the latest GST Council meeting, the proposal to levy GST on payment aggregators’ income for transactions under ₹2,000 was discussed, but no final decision was reached.
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The fitment committee will now analyze the potential effects and provide a detailed report with recommendations for the Council’s consideration.
More than 80% of India’s digital payments fall within this transaction value.
A government notification issued during demonetization in 2016 exempted payment aggregators from charging tax on services offered to merchants for these smaller transactions. However, the authorities are now revisiting the tax implications, with retrospective tax collection starting from FY2017-18, when GST was implemented.
Currently, payment aggregators charge merchants between 0.5% and 2% per transaction. If the proposed GST is imposed, this cost may be passed on to merchants, potentially increasing the financial burden on businesses relying on small-value transactions. Aggregators facilitate digital payments through methods like QR codes, POS machines, and net banking, without being liable for GST on transactions under ₹2,000 at present.
The GST Council is expected to provide further clarification on this.