Go BHIM, earn GST cashback: Council

The GST Council chaired by interim finance minister Piyush Goyal on Saturday decided to roll out cashback on digital payments for Rupay card and BHIM users on a pilot basis. It also formed a Group of Ministers (GoM) to consider tax relief and other proposals for the benefit of small traders and businesses in the Micro, Small and Medium Enterprise (MSME) sector.

Customers paying through RuPay debit card or BHIM app will get a cash back of 20 of the total tax amount, subject to a maximum of Rs 100.

"GST incentives for digital payments will be rolled out on a pilot basis by the states which volunteer for it. Based on the pilot, we can assess the revenue gain or loss," Goyal told reporters after the Council met in New Delhi.

"The revenue loss on account of the cashback mechanism is estimated to be over Rs 1,600 crore. It is being rolled out on a pilot basis to assess the feasibility of implementing it throughout the country," a government official said.

The move is aimed at encouraging the use of the digital mode of payment said Bihar Deputy Chief Minister Sushil Kumar Modi.

The National Payments Corporation of India (NPCI) will soon develop a system for the same.

It was also decided to form a panel to look into the GST related issues concerning MSMEs.

"GST Council has decided to form a sub-committee under the leadership of Shiv Pratap Shukla, Minister of State for Finance. Delhi deputy chief minister Manish Sisodia, Punjab finance minister Punjab Manpreet Singh Badal, Assam finance minister Hemanta Biswa Sarma and Kerala finance minister TM Thomas Isaac will be a part of this committee," Goyal said.

The Law Committee and Fitment Committee will study the issues and give their report to the GoM. The proposals related to rate cuts will be considered by the Fitment Committee comprising senior government officials, while law and procedure related issues will be looked after by the Law Committee, comprising bureaucrats. Over 150 issues were submitted before the Council in today's meeting which was called to discuss the issues related to MSME sector. The next Council meeting is scheduled to be held in the last week of September at Goa.

"The concept of incentivising digital payments has been in the works for quite some time and it is expected that the same will be extended to all payment intermediaries after the pilot project is concluded," said MS Mani, partner, Deloitte.

As far MSMEs are concerned, Mani added, "They may not be large taxpayers, they are significant employment generators. Resolving their issues through a separate panel is an essential step."