Digital Payment Incentives for GST Transactions

The GST Council has introduced a cashback incentive for consumers making GST bill payments using approved digital methods. This scheme, offering 20% cashback up to Rs 100, aims to promote India's digital economy. The article details various digital payment options like USSD, UPI, BHIM, and RuPay cards, explaining their functionality and how to use them for secure transactions.

📖 2 min read read🏷️ Digital Payments

The GST Council, during its 29th meeting, recently announced a cashback incentive for consumers who settle their GST bills through designated digital payment methods. This cashback offers 20% of the GST amount, capped at Rs 100, and is credited directly to the consumer's bank account associated with their card or user ID. Initially, this initiative will be implemented on a pilot basis. However, it is anticipated to significantly bolster the government's primary "Digital India" campaign.

Understanding Digital Payment Methods for GST

USSD

Unstructured Supplementary Service Data (USSD) is a mobile communication technology that facilitates data exchange between a mobile phone and an application. USSD services enable users to initiate fund transfers and check bank statements.

To utilize USSD:

Ensure the mobile number linked to your bank account is the same as the one you are using.
Dial *99# and follow the instructions provided through the Interactive Voice Response (IVR) menu.

UPI

The Unified Payments Interface (UPI) is a system designed to consolidate multiple bank accounts into a single mobile application. Account holders can use a UPI-enabled app to send and receive money. This service allows linking more than one bank account, offering 24/7 fund transfers without additional charges. A key benefit of UPI is the ability to transfer funds without needing a bank account number or an IFSC code.

Here's how to use UPI:

Download the application available on Android or iOS platforms.
Register for the service by entering your bank account information.
Create a Virtual Payment Address (VPA) and a Mobile Banking Personal Identification Number (MPIN) to begin transactions.

BHIM

Bharat Interface for Money (BHIM) enables users to conduct payments via the UPI application. The BHIM app is accessible to anyone possessing a mobile number, a debit card, and a valid bank account. Funds can be transferred to various bank accounts.

To use the BHIM App:

Download and install the BHIM application from Android or iOS app stores.
Select your preferred language.
Register by providing the mobile number linked to your bank account.
Input your bank details and set up a UPI PIN to start using the service.

RuPay Card

RuPay, a portmanteau of 'rupee' and 'payment', was introduced on March 26, 2012, by the National Payments Corporation of India (NPCI). Its purpose is to integrate diverse payment systems within India. This network serves as India's first indigenous card network and payment gateway. Any Indian citizen can apply for a RuPay card from most public, private, or cooperative banks. Prospective customers can open a savings account at a bank to obtain a RuPay Debit Card. The broader "Digital India" program aims to develop India into a digital economy, with a significant focus on encouraging a cashless society through various accessible digital payment options.

Frequently Asked Questions

What is the Goods and Services Tax (GST) in India?

The Goods and Services Tax (GST) is an indirect tax used in India on the supply of goods and services. It is a comprehensive, multi-stage, destination-based tax that replaced multiple cascading taxes levied by the central and state governments.

How many types of GST are there in India?

There are four main types of GST in India: Central GST (CGST) levied by the Centre, State GST (SGST) levied by the State, Integrated GST (IGST) levied by the Centre on inter-state transactions, and Union Territory GST (UTGST) for Union Territories.

Who is required to register for GST?

Businesses whose aggregate turnover exceeds a specified threshold limit (which varies based on the state and nature of supply) are generally required to register for GST. Certain categories of businesses, like those involved in inter-state supplies, must register irrespective of turnover.

What is an Input Tax Credit (ITC) under GST?

Input Tax Credit (ITC) allows GST-registered businesses to claim credit for the GST paid on purchases of goods or services that are used for business purposes. This reduces their overall tax liability by offsetting the tax paid on inputs against the tax collected on outputs.

What are the benefits of the GST regime?

The GST regime offers several benefits including simplifying the indirect tax structure, reducing the cascading effect of taxes, improving ease of doing business, promoting a common national market, and increasing tax compliance due to its transparent nature.