Twitter India has partnered with Razorpay for the Tipping feature on its platform, the Economic Times reported. Twitter wants to enable users to make payments on its platform, through ‘Twitter Tip Jar’, to non-governmental organisations (NGOs) journalists, freelancers, content creators and other civil-society groups looking to mobilise funds.
As scores of Indians got infected by the COVID-19 virus over the last year, with the pace of infections in India breaking global records in the last few months, several startups, content creators and NGOs turned to social media to mobilise funds for on-the-ground relief efforts. Twitter and other social media platforms have played an increasingly important role in India’s COVID-19 fight, helping ordinary citizens reach out to government officials, NGOs, activists and political actors for help.
In early May, Twitter announced that it would launch the Tip Jar feature stating that specific users will be eligible to receive payments. The platform will introduce a Dollar or Rupee icon next to the follow button on a users’ profile. Twitter has been beta testing the feature in India for many months. As of Tuesday evening, the Tip Jar icon was enabled on the public profiles of several Twitter India employees. However, by Wednesday the icon was disabled. MediaNama has seen screenshots of the feature on the profiles’ of Twitters’ Indian employees.
However, Twitter is currently embroiled in legal battles with the Government of India over two issues, the first being a political fight between the ruling Bharatiya Janata Party and the Indian National Congress, and the second being the platforms’ compliance with the new Information Technology Rules 2021 which came into effect on May 26, 2021.
According to the report, Twitter will not charge its users for this service and could work with more payments companies to enable the Tip Jar feature in India. Once the user clicks on the Tip Jar icon, they will be redirected to a Razorpay payments page through which they can make the payment through their debit/credit cards, net banking or the Unified Payments Interface. While there could be a Rs 1 lakh limit on individual user accounts, merchant accounts registered as businesses could collect higher amounts, the report said citing unnamed sources.
The report said that majority of the integration work between Razorpay and Twitter has been completed, with a few things left to do before the official launch.
Razorpay and Twitter declined to comment.
Tax and payments security implications
There are two issues that need to be safeguarded by the two platforms. The first is the tax implication and the second is payments security.
Earlier this month, Pallav Narang, Chartered Accountant and Partner at CNK RK, told MediaNama that tips will most likely not attract GST because the tipper is not sending money in exchange for some good or service. Rather the tipper is sending it as an appreciation or to show support, which makes it more likely to be considered as a “gift” under India’s Income Tax Act, he said. As such, gifts up to Rs 50,000 in a financial year are exempt from tax. But for any amount higher than this, the entire gift amount becomes taxable and will be added to a person’s income and taxed at his/her slab rate, Narang added.
This means that Razorpay and Twitter would also need to facilitate receipts to people donating money, for instance, so that they can deduct such payments from their income tax computations. If the payment is for subscriptions on the other hand, if Twitter enables users to pay journalists and news organisations through the Tip Jar, then a different receipt would need to be provided by Razorpay.
Social media is a key tool used by fraudsters to conduct phishing and social-engineering scams on unsuspecting people. In the wake of the pandemic, many fake merchants and fraudsters were able to dupe customers by pretending to be suppliers of regular consumer goods entities, NGOs, healthcare service providers, pharmacies or oxygen suppliers.
While on one hand, Twitter has to ensure only verified and legitimate users can access the feature and receive payments, on the other, Razorpay would need to conduct a tight Know-Your-Customer and due diligence on users’ who wish to enable the feature and receive payments. This would help protect persons donating money and would ensure that only legitimate organisations and people receive payments on behalf of the public.
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