Loknath Das July 3, 2017 Credit Cards
The government has rejected rumours that payments via electronic mode or by credit cards would lead to double taxation under the GST regime. Social media is abuzz with rumours that customers will have to pay tax twice in case of electronic modes of payment after the government implemented Goods and Services Tax from July 1, 2017.
Revenue secretary Hasmukh Adhia clarified via a tweet that “a wrong message is doing rounds on social media that if you make payment of utility bills by credit cards, you will be paying GST twice. This is completely untrue. Please do not recirculate such message without checking it with authority.” AP Hota, managing director of National Payments Corporation of India, told Times of India that rumours about double taxation were untrue. Hota said there is no other charge other than the service tax rate of 15 percent becoming GST at 18 percent. The TOI report quoted some bankers as saying the only impact of GST in the financial sector was three percentage points increase in tax. Bankers said that in the financial sector the only impact of the imposition of GST was three percentage point increase in tax. “All services against which fees are charged in the financial sector are already taxed. However, there is no transaction tax” said a senior banker.
Hence if a customer pays Rs 5,000 via a credit card in a restaurant, the owner of the business pays Rs 100 as merchant discount rate to the bank. Now payment of Rs 100 (a fee against a service) will attract GST of Rs 18 against service tax of Rs 15 which the merchant used to pay earlier.
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