The Sushil Modi-led ministerial panel today approved a proposal for incentivising digital payments through Rupay card and BHIM app by way of cashbacks.

Share Market Live

NSE

Once implemented, customers making payments using Rupay card or BHIM UPI will get a cashback of 20 per cent of the total GST amount, subject to a maximum of Rs 100.

The recommendations of the Group of Ministers (GoM) will now be placed before the GST Council tomorrow.

Briefing reporters after the meeting, Modi said the move to provide cashback to users of Rupay and BHIM is intended to encourage use of digital mode of payment, especially in semi-urban and rural areas.

The move will have a revenue impact of Rs 1,000 crore annually, to be shared equally between the Centre and states.

Asked by when the cashback would be credited to the bank account, the Bihar deputy chief minister said the detailed modalities will be worked out once the GST Council clears the proposal.

He said based on the success of this move, the incentives will be extended to users of all card holders at a later date.

The Council had in its meeting on July 21 tasked the GoM to work out modalities for incentivising digital payments under Goods and Services Tax (GST) for users of Rupay and BHIM.

All Jan-Dhan account holders have Rupay cards, which has been launched by the National Payments Corporation of India (NPCI). BHIM, a mobile app developed by NPCI, is based on United Payment Interface (UPI) for cashless payments.

The GoM had last month decided to defer by a year the proposal to incentivise digital payments under GST citing revenue implications of doling out concessional tax rate.

At that time, the GoM was looking at incentivising digital payments using all modes of online payments.

However, the GST Council, chaired by Union Finance Minister Piyush Goyal, at its latest meeting on July 21, asked the GoM to have a re-look at the possibility of early introduction of concessions for digital payments.

To incentivise digital transactions, the GST Council in its last meeting in May had discussed giving a concession of 2 per cent in GST rate (where the tax rate is 3 per cent or more) to consumers making payment through cheque or digital mode. The discount would be capped at Rs 100 per transaction.

The five-member GoM on incentivising digital transaction includes Gujarat Deputy Chief Minister Nitinbhai Patel, West Bengal Finance Minister Amit Mitra, Haryana Excise and Taxation Minister Capt Abhimanyu and Punjab Finance Minister Manpreet Singh Badal.