GST not payable on Govt incentive to banks for promoting low value BHIM-UPI transactions

“As recommended by the Council, it is now clarified that incentives paid by MeitY to acquiring banks under the Incentive scheme for promotion of RuPay Debit Cards and low-value BHIM-UPI transactions are in the nature of subsidy and thus not taxable,” it said.


All services provided by the Central or State Governments or local authorities to anyone other than business entities are currently free from the GST, with the exception of a few designated services such as postal department services and transportation.




Given the terms of the Central GST Act of 2017, the ministry has said that the incentive is in the nature of a subsidy that is directly related to the cost of the service and does not contribute to the taxable value of the transaction.


The government provides banks with incentives as a percentage of the value of RuPay Debit Card transactions and low-value BHIM-UPI transactions up to 2,000 under the Incentive scheme for the promotion of RuPay Debit Cards and low-value BHIM-UPI transactions.


Banks and system providers are not permitted to collect fees from individuals using BHIM or RuPay Debit cards for sending or receiving payments, according to the Payments and Settlements Systems Act of 2007.




The ministry has also made it clear that the GST is applicable to the lodging services that the Air Force Mess provides to its troops. It stated that the revenue department has received inquiries demanding clarity on whether GST is payable on lodging services provided by the Air Force Mess to its troops.




UPI set a record in December alone with 782.9 billion rupees worth of digital payment transactions.