The government pays the acquiring banks an incentive as a percentage of the value of transactions up to 2000 under the incentive plan for the promotion of RuPay debit cards and low value BHIM-UPI transactions.
New Delhi, India – The Central Board of Indirect Taxes and Customs (CBIC) has stated that no Goods and Services Tax (GST) is imposed on government incentives granted to banks for promoting RuPay debit cards and low value BHIM-UPI transactions.
CBIC stated in an order that the government pays the acquiring banks an incentive as a percentage of the value of transactions up to Rs.2000 under the incentive plan for promotion of RuPay debit cards and low value BHIM-UPI transactions.
According to CBIC, this incentive is in the form of a subsidy directly related to the price of the service, and thus does not form part of the taxable value of the transaction.
In the current fiscal year, the government would spend Rs. 2,600 crore on a subsidy scheme to promote RuPay debit cards and low-value BHIM-UPI transactions.
The explanation is based on the GST Council’s judgments from last month.
The CBIC further stated that GST does not apply to housing services provided by the Air Force Mess to its troops.
Except for a few defined services such as postal department services, transportation of goods and passengers, etc., all services provided by the Central Government, state governments, Union Territories, or a local authority to any individual other than commercial organizations are exempt from GST.
As a result, CBIC noted that accommodation services given by the Air Force Mess and other comparable messes maintained by the Army, Navy, Paramilitary, and Police forces to their employees or any individual other than a business organization do not attract GST.
CBIC issued a set of instructions to senior field officers on Friday clarifying the tax and cess rates applicable to commodities such as sports utility vehicles (SUVs). The tax administration explained that a GST compensation cess of 22% is applied on motor vehicles that meet all four conditions it has outlined: the engine capacity exceeds 1,500 cc, the length exceeds 4,000 mm, and the ground clearance is 170 mm or more. This clarification only applies to SUVs.
