According to the finance ministry, the government will not apply GST to incentives given to banks for promoting RuPay debit cards and low-value BHIM-UPI transactions. A Rs 2,600 crore incentive program for banks to promote RuPay debit cards. And low-value BHIM-UPI transactions in the current year were approved by the cabinet last week.
The government provides banks with incentives
as a percentage of the value of RuPay Debit Card transactions. And low-value BHIM-UPI transactions up to Rs 2,000 under the Incentive scheme for the promotion of RuPay Debit Cards. And low-value BHIM-UPI transactions. The Payments and Settlements Systems Act, 2007, forbids banks and system providers from collecting any money. BHIM or RuPay Debit cards to send or receive payments. The ministry stated that the incentive is in the nature of a subsidy that is directly correlated to the cost of the service. In a circular to the chief commissioners of GST. And that it does not contribute to the taxable value of the transaction in light of the terms of the Central GST Act, 2017.
According to the Council’s recommendation
it is hereby made clear that MeitY’s incentives granted to acquiring banks. As part of the Incentive Scheme for Promoting RuPay Debit Cards and Low-Value BHIM-UPI Transactions are in the nature of subsidies and are not taxable. UPI set a record in December alone with 782.9 billion rupees worth of digital payment transactions. Separately, the government has clarified the application of GST on lodging services provided to its employees by Air Force Mess.
It stated that references had been received
by the revenue, department asking for clarity on whether GST is due on lodging services provided by the Air Force Mess to its troops. Currently, all services provided by the Central or State Governments or local authorities to anyone other than commercial organizations are exempt from GST, with the exception of a few specifically listed services including postal services and transportation.
It is hereby made clear that accommodations provided by the Air Force Mess and other comparable messes, such as the Army Mess, Navy Mess, Paramilitary Mess, and Police Forces Mess to their personnel or to anyone who is not a business entity are covered by Sl. No. 6 of notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 provided the services provided by such messes qualify to be considered as services supplied by the Central government, state government, or Union territory. With 782.9 billion digital payment transactions totaling Rs. 12.82 lakh crore in just December, UPI set a new record. The ministry has separately clarified the use of GST on lodging services provided to its employees through Air Force Mess.
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