Incentives on Digital Payments


The GST Council has veered around to giving up to Rs 100 incentive for digital payments for purchases by consumers, approved a new model for single monthly return and decided to turn the GSTN into a Government-owned entity. The panel, the highest decision-making body for Goods and Services Tax (GST) regime, however, deferred a decision on levying a cess on sugar after opposition from some states. The Union Finance Ministry announced setting up of two panels of state finance ministers one for looking into the issue of cess on sugar and the other on incentives on digital payments. Briefing about the decision taken at the 27th meeting of the council, Finance Minister Arun Jaitley said all taxpayers excluding a few exceptions like composition dealers shall file one monthly GST return in place of multiple filings currently required in a month. Return filing dates shall be staggered based on the turnover of the registered person to manage load on the IT system. Composition dealers and dealers having nil transaction shall have facility to file quarterly return. Finance Secretary Hasmukh Adhia said the monthly return filing system will come into force in six months and the present system of filing of return through GSTR 3B and GSTR 1 forms would continue for not more than six months.
The Council, also referred the issue of incentivizing digital payments to a group of state finance ministers after some states wanted a negative list. Most member states on the panel were agreeable to the proposal of giving a concession of 2 per cent in GST rate (where the tax rate is 3 per cent or more) on business-to-consumer (B2C) supplies, for which payment is made through cheque or digital mode, subject to a ceiling of Rs 100 per transaction, so as to incentivise promotion of digital payments. A separate group of ministers would go into the issue of levy of cess on sugar and reduction of GST on ethanol. On converting GST Network (GSTN), the IT backbone of the new indirect tax regime, into a 100 per cent Government-owned company, Jaitley said it was agreed that the 51 per cent equity held by private entities should be taken over by the government and "eventually the Central Government will hold 50 per cent and state Governments (together) will hold 50 per cent". He said the collective share of state Governments will be pro rata, divided among states in accordance with their GST ratios. While doing so the council also recommended that the GSTN will continue to employ people contractually and have the flexibility to get the best talent from the market considering the wide range of activities and the responsibilities of GSTN itself.

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