The Goods and Services Tax (GST) Council is currently facing an important decision that could impact how we make small online payments. Specifically, they are considering whether to impose an 18% GST on transactions below ₹2,000 that are processed through payment aggregators. This decision is still pending, and consumers are left wondering how it might affect their ability to make smaller payments online.
What Happened?
During the 54th GST Council meeting held on September 9, 2024, the council discussed a proposal that would charge 18% GST on the revenue earned by payment aggregators from transactions under ₹2,000. However, the council could not reach a final decision on this matter. As a result, they have referred it to the GST fitment committee for further review.
Concerns from Finance Officials
Uttarakhand Finance Minister Premchand Aggarwal raised concerns about the potential effects of this tax on everyday consumers. If implemented, this tax could make small online transactions more expensive, which may discourage people from using digital payment methods for lower-value purchases. Recognizing these implications, the council decided that a thorough analysis is needed before making any changes.
The Role of the GST Fitment Committee
The GST fitment committee has been tasked with investigating the potential impacts of introducing this tax. They will study various factors, including how it could affect consumers and businesses, and prepare a detailed report for the GST Council to consider. This review process is crucial because it will provide insights into the consequences of imposing an 18% GST on smaller transactions.
What Should Consumers and Businesses Expect?
For now, both consumers and businesses must wait for the fitment committee’s review and the subsequent decision from the GST Council. Until these discussions are concluded, no changes will be made to the taxation of online transactions below ₹2,000. This means that, at least for the time being, customers can continue to make small payments without the added burden of an 18% tax.
Conclusion
The decision regarding the 18% GST on transactions below ₹2,000 remains unresolved. The GST Council’s referral to the fitment committee indicates that more evaluation is necessary before a final decision can be reached. As discussions continue, consumers and businesses will need to stay informed about potential changes and how they might impact online transactions in the future. Until the committee completes its work and the council makes a decision, it’s business as usual for small online payments.
