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GST Council approves 20% cashback for payments via Rupay, BHIM app

The Goods and Services Tax (GST) Council has approved a pilot project that will offer incentives for digital payments, in the form of cashbacks, said Finance Minister Piyush Goyal. Once implemented, customers making payments using Rupay cards and BHIM UPI applications will get a cashback of 20% of the goods and services tax (GST), subject to a cap of Rs 100 per transaction.

“We have decided to undertake a pilot project. A broad framework has been worked out so that users of RuPay card, BHIM, Aadhaar, UPI, USSD transactions can be given the incentives because these are mostly used by poor people,” said Goyal. Uttar Pradesh, Bihar, Maharashtra, Gujarat, Tamil Nadu and Assam have opted to join the digital incentives pilot project.

The revenue department and GST Network (GSTN) will coordinate with the National Payments Corporation of India (NPCI) for the development of software to facilitate the refunds in these digital transactions.

A group of ministers under Bihar deputy chief minister Sushil Modi estimated the revenue impact of the cashback scheme to be around Rs 980 crore per year, when it gets rolled out nationally. “Compliance will increase. In the longer run, it will encourage formalisation of the economy,” he said.

However, West Bengal’s Finance Minister Amit Mitra seemed critical of the panel’s decision to offer the said cashbacks. He said,” Already Rs 43,000 crore is the estimated shortfall in the first quarter of this fiscal. If we give incentives and reduce revenues, the shortfall will increase. If we give one incentive today, then tomorrow we will have to give 10 other incentives,” he said. The next GST Council meeting is scheduled to be held in Goa on September 28th and 29th.

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