Incentives paid by the government to banks for promoting RuPay debit cards and low-value BHIM-UPI transactions will not attract GST, the Finance Ministry said.
Last week, the Cabinet authorized a Rs 2.6 billion incentive scheme for banks to promote RuPay debit cards and low-value BHIM-UPI transactions in the current fiscal year.
Under the incentive scheme for the promotion of RuPay debit cards and low-value BHIM-UPI transactions, the government pays banks an incentive as a percentage of the value of RuPay debit cards and low-value BHIM-UPI transactions. value up to Rs 2,000.
The Payment and Settlement Systems Act 2007 prohibits banks and system providers from charging any amount to a person making or receiving payments via RuPay or BHIM debit cards.
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In a circular to the main GST commissioners, the Ministry said that the incentive has the character of a subsidy directly linked to the price of the service and it does not form part of the taxable value of the transaction in view of the provisions of the GST Law. center, 2017.
“As recommended by the Council, it is hereby clarified that the incentives paid by MeitY to acquiring banks under the incentive scheme for the promotion of RuPay debit cards and low-value BHIM-UPI transactions are in the nature of a subsidy and are therefore not subject to tax. saying.
In December alone, UPI achieved a digital payment transaction record of Rs 782.9 crore with a value of Rs 12.82 crore.
GST Applicability
Separately, the Ministry has also clarified the applicability of the GST on accommodation services provided by Air Force Mess to its personnel.
It said the revenue department had received references seeking clarification on whether GST is paid for accommodation services provided by Air Force Mess to its staff.
At present, all services, except for some specific services, such as postal department services and transportation, provided by the central or state government, or local authority to any person other than a business entity, are exempt from GST.
“It is clarified that the accommodation services provided by the Air Force Dining Room and other similar dining rooms, such as Army dining rooms, Navy dining rooms, Paramilitary and Police Forces dining rooms to their personnel or any person who is not an entity commercial are covered by Sl. No. 6 of notification No. 12/2017 Central Tax (Rate) dated 06.28.2017 provided that the services provided by said issues qualify to be considered as services provided by the Central Government, State Government, Union Territory or authority local,” the ministry said. .
“CBIC has clarified that accommodation services provided by Air Force Mess, Army Mess, Navy Mess, Paramilitary and Police Mess to their personnel or anyone who is not a commercial entity are tax neutral.
This clarification would help restrict the cost of hosting services for our elite force services,” said AMRG & Associates Senior Partner Rajat Mohan.
