18% GST on Payment Aggregators for Sub Rs. 2000 Transactions likely after GST Council Meeting

The Goods and Services Tax ( GST ) Council is expected to consider imposing an 18% GST on payment aggregators (PAs) for digital transactions up to ₹2,000 using debit and credit cards, according to a report by CNBC-TV18. This proposal will be discussed at the GST Council’s upcoming meeting on September 9, 2024.

Payment aggregators, which facilitate online payments for businesses, may soon be subject to this tax, as the GST fitment committee—comprising officials from both the Centre and states—views PAs as intermediaries, unlike banks, and believes they should therefore fall under the GST framework.

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The final decision will be taken at the 54th GST Council meeting, chaired by Finance Minister Nirmala Sitharaman. Sources suggest that small businesses handling numerous low-value transactions could be negatively impacted if the tax is approved.

Read More: 54th GST Council Meeting on September 9

Payment gateways are likely to pass on this new cost to merchants, potentially affecting small business owners. Currently, payment aggregators charge merchants a fee of 0.5% to 2% per transaction, but the introduction of GST could increase these fees.

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At present, payment aggregators are exempt from GST on transactions under ₹2,000, as they manage a variety of digital payments, including QR codes, POS machines, and net banking. The exemption was originally introduced in 2016 following the demonetization of ₹500 and ₹1,000 notes. If the proposal is implemented, it could mark a significant change for small businesses and payment processing in India.

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