The group of State Finance Ministers headed by Bihar Deputy Chief Minister Sushil Modi on Sunday decided to defer by a year the proposal to give tax concessions on digital payments under GST as revenue collections have still not stabilized under the new indirect tax regime. The decision of the Group of Ministers will be conveyed to the GST Council, headed by the Union Finance Minister, which will be meeting on July 21.
Modi said, “The Group of Ministers (GoM) on digital transactions has decided that this is not an opportune moment to incentivise digital payments as it will have revenue implications. Let returns and GST revenues stabilise, then we can think about incentivising digital transactions.”
“The GoM will be recommending to the Council that it may think about the proposal of incentivising digital transaction again after a year. The GoM is recommending deferring the proposal for a year,” the Bihar Deputy Chief Minister said.
To incentivise digital transaction, 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 transactions includes Gujarat Deputy Chief Minister Nitinbhai Patel, West Bengal Finance Minister Amit Mitra, Haryana Excise & Taxation Minister Capt Abhimanyu and Punjab Finance Minister Manpreet Singh Badal.
Another ministerial committee under Modi, on Reverse Charge Mechanism, which also met on Sunday, has decided to recommend that powers be given to the GST Council to notify the registered persons who would come under RCM purview. Under the RCM in GST law, registered dealers are required to make tax payments in case they procure goods from unregistered businesses.
“With regard to the decision on RCM, the GoM will recommend that the GST Council will decide on the class of registered persons who would be required to deposit taxes on reverse charge basis. We have recommended omitting the present Section 9(4) and introducing a new Section 9(4) which will permit the government, on the recommendations of the GST Council, to notify specific class of registered persons, goods which would be covered under RCM provision,” Modi added. The conditions and the date for levying of RCM will be decided by the council, Modi observed.
Source: Business Today
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