Delhi to oppose GST on online payments below ₹2,000: Atishi

Delhi Finance Minister Atishi addressing reporters on Sunday.
| Photo Credit: SHASHI SHEKHAR KASHYAP

The Delhi government will oppose the Centre’s proposal to impose a tax on payment aggregators for online transactions below ₹2,000 in value at the Goods and Services Tax (GST) Council meeting as the move is likely to hit small businesses and consumers, said Finance Minister Atishi on Sunday.

Ms. Atishi’s remarks come a day ahead of the crucial 54th GST Council meeting, where the proposal to impose an 18% GST on payment aggregators for facilitating online transactions of small value might come up for discussion, among a host of other issues.

The panel is headed by Union Finance Minister Nirmala Sitharaman and includes Ministers from the States.

Till now, any online transaction below ₹2,000 in value is exempt from such a tax, with payment aggregators charging merchants a fee varying from 0.5% to 2% per transaction.

It is feared that the imposition of GST on transactions of small value may result in payment aggregators passing on this extra cost to merchants.

‘Centre’s hypocrisy’

Slamming the proposal, Ms. Atishi termed it “hypocrisy” on the part of the Prime Minister Narendra Modi-led Union government, which she said has been promoting digital transactions for a cashless economy for years now.

Mr. Atishi said if the proposal is approved, all small online purchases made via debit or credit card will be taxed.

“When we buy something online using debit cards, credit cards, or net banking, if our transaction amount is below ₹2,000, it is not subjected to GST. If the transaction amount exceeds ₹2,000, it attracts a GST of 18% as a payment gateway fee. The Centre is proposing that all transactions through payment gateways will now be charged 18% GST,” she said.

Ms. Atishi said if allowed, the move would impact small consumers and businesses as the bulk of online transactions in the country are below ₹2,000 in value.

‘Extend exemptions’

“This is important for us all. The Delhi government is opposing it because if every online transaction attracted GST, the payment gateways will pass it on to merchants running small businesses or stores, which in turn will be passed on to consumers,” she added.

Ms. Atishi said currently, small businesses contribute around 30% to India’s gross domestic product (GDP) and employ 62% of the total workforce.

“So, the Centre should promote small businesses and extend tax exemptions to them. Instead of promoting them and creating new avenues for their economic feasibility, it is imposing taxes on payment gateways, which will hit these small businesses and their customers,” the Minister added.

Published – September 09, 2024 12:59 am IST

_{Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.}