New Delhi: To promote digital payments in the country, GST Council on Saturday decided to launch pilot project under which discount of 20 per cent in GST — with an upper cap of Rs 100 — will be given as cashback to consumers who pay only through Rupay card, BHIM app, Aadhaar Enabled Payment System, UPI and USSD.
This incentive will not be available for payments made through other digital instruments like VISA or Mastercard credit or debit cards.
Finance minister Piyush Goyal indicated that Rupay Card and BHIM has been selected for the cashback incentives as it is used by common man or weaker section of the society.
Mr Goyal said that software backbone for the incentive will be set up and then those states who are interested can launch the pilot project.
A group of ministers under Bihar deputy chief minister Sushil Modi, had on Friday worked out the cashback mechanism and had assessed that the revenue loss on account of it would be Rs 1,000 crore annually.
The GST Council meeting on Saturday was specifically called to look into the issues faced by the small and medium enterprises in the country who are major job creators.
“We have decided to undertake a pilot project. A broad framework has been worked out so that users of Rupay debit card, BHIM, Aadhaar, UPI, USSD transactions can be given the incentives because these are mostly used by poor people,” Mr Goyal said.
The GST Council also set up a six-member panel of ministers under Minister of State for Finance Shiv Pratap Shukla to look into the issues of the MSME sector.
Other members of the ministers’ panel are Delhi Deputy Chief Minister Manish Sisodia, Bihar Deputy Chief Minister Sushil Modi, Assam Finance Minister Himanta Biswa Sarma, Kerala Finance Minister Thomas Isaac and Punjab Finance Minister Manpreet Singh Badal.
Simultaneously, the law and procedure as well as rates related issues for the MSME sector would be considered in detail by the law committee and the Fitment Committee comprising central and state tax officers. They will give their recommendations to the GoM, Mr Goyal said.
The ministerial panel is expected to finalise its report within six weeks.
Punjab finance minister Manpreet Singh Badal said small and medium enterprises provide 70-80 per cent employment in the country, but they were suffering huge losses. “What has been decided is that GoM within next six weeks will give a report on how do we enable industries to compete and what are the processes which are destabilising the smaller players,” Mr Badal said.
The next meeting of the GST Council will be held on September 28-29 in Goa. According to reports, GST Council is unlikely to consider tax cuts for some time now due to shortfall in revenue in the first quarter. Last month GST Council had reduced rates on over 100 consumer goods ranging from footwear to washing machines. After this rating agency Moody’s had warned that GST rate cuts will weigh on government’s revenue collection and is ‘credit negative’ as it will put pressure on efforts of fiscal consolidation.
