The Goods and Services Tax (GST) Council is considering an 18% GST levy on payment aggregators (PAs) for digital transactions up to Rs 2,000, according to a CNBC-TV18 report. This proposal is set to be discussed at the Council’s 54th meeting, scheduled for September 9, and will be chaired by Finance Minister Nirmala Sitharaman.
Payment aggregators, which facilitate online payments for businesses via debit and credit cards, might soon face this new tax. The GST fitment committee, consisting of revenue officials from both the central and state governments, believes that since payment aggregators act as intermediaries for card transactions—unlike banks—they should be subject to GST.
The introduction of this tax could have significant implications for small businesses that conduct numerous low-value transactions daily. Sources suggest that if implemented, payment aggregators might pass this additional cost onto merchants and small business owners, who could see an increase in transaction fees.
Currently, payment aggregators are exempt from GST on transactions below Rs 2,000. This exemption has been in place since 2016, following the demonetization of Rs 500 and Rs 1,000 notes. Presently, payment aggregators charge merchants a fee between 0.5% and 2% per transaction, but the new GST could shift this financial burden onto businesses.
The final decision on this proposal will be made during the GST Council’s upcoming meeting, with implications for both businesses and consumers likely to be significant.
