Govt readies a digital transaction push in GST regime, may offer 200bps cut on B2C transactions

The government has prepared a proposal to offer a 200 basis points cut on the GST payable in all for business-to-consumer (B2C) transactions that take place digitally to push digital transactions under the GST regime.

The proposal, which is yet to be deliberated upon by the GST Fitment Committee, offers a maximum discount of Rs 100 on any digital transaction of goods that are above the 3 percent GST tax slab, sources to CNBC-TV18.

For instance, if a consumer buys any good under the 18 percent, then the consumer will have to pay only 16 percent GST or Rs 100, whichever is lower if the transaction is carried out digitally.

As per the proposal, the cost for this discount cost will be borne by the state and the Centre.

A revenue loss on account of this discount is estimated to be around 21,000 to 26,000 crore annually, but, the government feels that it can avail this discount as an increased compliance of consumers with digital transactions will make up for the revenue.

According to the sources, the government is quite confident to make up for such a loss as reports from several states are already showing a decline in their revenue losses.

The government was looking at incentivising digital transactions for both customers and traders in the recent GST Council meetings so that it could find new measures to boost digital payments in the country.

The proposal is likely to boost digital transactions that will help the present government achieve its goal to makeco India a digital economy.