Payment gateways have submitted that any tax levy will hurt the growth of digital payments as they will pass on the added burden to merchants.
The council will consider a proposal on levying GST as the Fitment Committee sees payment aggregators as facilitators for card transactions. Currently, these firms charge a payment gateway fee of 0.5% to 2% on each credit and debit card transaction.
“We have made multiple representations to the finance ministry and even met the revenue secretary to explain our stance that a GST levy will be detrimental to the growth of digital payments and a big burden on our pockets,” said an official who was part of the deliberations. “We hear that the GST levy could be retrospective in nature and that will lead to a huge tax outgo.”
According to the people cited above, the Fitment Committee feels that payment aggregators act as intermediaries for digital transactions and should not be classified as banks. As per the existing regulations, payment aggregators are currently exempt from GST on transactions of less than ₹2,000.
“We are hoping for a positive outcome at the GST Council meeting, GST on our commissions will be a huge liability for us and work against the growth of such small value transactions in the far nook and corner of this country,” said Vishwas Patel, joint managing director, Infibeam Avenues, operator of CCAvenue, a leading payment gateway.ET earlier reported on large payment aggregators like BillDesk and CCAvenue getting notices from tax authorities, demanding GST on fees levied by them on merchants for processing digital transactions of under ₹2,000. The authorities are now seeking tax from fiscal 2017-18 when the GST regime was rolled out.The issue is only on transactions done via debit cards, credit cards and net banking. Unified Payments Interface (UPI) and RuPay debit card payments are offered without any merchant discount rate, or transaction fee, under government orders.
In India, over 80% of the total digital payments are less than ₹2,000 in value.
