The 54th GST Council will meet on September 9 in New Delhi to consider a new proposal regarding the taxation of small digital transactions. The proposal suggests that an 18% GST should be applied to income earned by payment aggregators from transactions under ₹2,000.
CNBC TV-18 indicate that this proposal follows detailed discussions by the fitment committee appointed by the GST Council. The committee has proposed that payment aggregators like PineLabs and Razorpay, which facilitate transactions via debit cards, credit cards, and other digital payment methods, should pay GST on their income from these transactions.
Currently, payment aggregators are exempt from GST on transactions below ₹2,000. This exemption was introduced in 2017 to encourage digital payments and reduce costs for merchants handling smaller transactions. The exemption was intended to help merchants avoid additional GST costs on minor payments and acknowledge the role of payment aggregators in managing these transactions.
The fitment committee argues that payment aggregators are not classified as banking companies, financial institutions, or non-banking financial companies (NBFCs) under the law. Instead, they are considered intermediaries, and therefore, their services should be subject to GST.
Experts suggest that if the GST Council approves the new tax, the added cost could be passed on to consumers by merchants. The GST Council will ultimately decide whether to accept, reject, or defer this proposal after further discussion.
