The Government of India focusing more on the promotion of digital payments to increase transparency in the system and to bring more accountability. National Payments Corporation of India (NPCI) which manages the Unified Payments System (UPI) taking forward the initiative of the department of revenue to achieve the government intention.
The members of NPCI has approved a proposal in which consumers and merchants might get tax benefits if they make digital payments through a Quick Response (QR) code on the UPI.
According to the people who participated in the committee meeting, consumers and merchants can get tax benefits when they share the information with NPCI. The information to be shared with NPCI could contain PAN of the consumers and GSTIN of the merchants. Once the consumers give consent to share their PAN, it will be stored in an encrypted format with NPCI.
This proposal of GST sops came first from the department of revenue, then it was discussed among the steering committee members. To get the tax benefits, GSTIN and PAN should be available with merchant and consumer respectively.
The committee is very clear that the information should be collected on the consent basis only. During the meeting, it was suggested that the first phase of the plan should be implemented with the merchant and then with customers. This concept is likely to be tested with two banks initially.
The idea is to offer a percentage of GST which was paid by consumers at the time of purchase. This will definitely help to increase digital payments, adoption to QR codes. This will also lead to more tax compliance. The quantum of incentive will depend on various factors including transactions size.
A formal deadline has not yet been fixed but as a next step, NPCI will submit an implementation plan to the government and this could come to reality in 2020. While the government target is to reach 40 billion digital payments by March 2020. In August month, UPI has reached its all-time high of more than 918 million transactions which is more than 12% when compared to the previous month. As per the RBI August month bulletin, UPI share in retail electronic payments jumped to 43% since its inception.
DVSR Anjaneyulu known as AJ, is a Chartered Accountant by profession. Loves to listening to music & spending time with family and friends.