Good News! GST impact to be less on aam aadmi, but there's a catch

GST have a transformational effect on the Indian economy. However, there is a cost attached and the aam aadmi has been feeling the pinch. Well, there is some really good news available that will ensure the common man will not be put too much out of pocket. However, as with all good things, there is a catch involved. To pay less, everyone will have to go digital! In a bid to encourage people to adopt digital payments through Rupay cards, BHIM app and UPI system for promoting cashless transactions, the government has last week asked states to offer cash backs to consumers. The states were asked to begin it on a trial basis.
 
Volunteer states would therefore roll out incentives on pilot basis for digital payments, and the GSTN, the IT backbone of the GST network, and the National Payments Corporation of India will develop a system soon for the same, Finance Minister Piyush Goyal had told reporters after the GST Council meeting.
 
Goyal said that customers making payments through Rupay card and BHIM UPI would get a cash back of 20 per cent of the total GST amount, subject to a maximum limit of Rs 100, terming the move as a step towards formalisation of the economy. 
 
Welcoming the move, Taranpreet Singh, Partner at TASS Advisors, said "Government keen to relook at GST compliances and other issues for SME’s. Proposal to set up a committee to review the impact of GST on SME by the GST council in today’s meeting is a step in right direction." 
 
"Digital India is a key agenda of this Government. To encourage cashless transactions using domestic wallets and BHIM app/ Rupay debit cards GST council has announced 20 percent cash back of GST to the consumers. The Aam Aadmi will now feel impact of GST on his budget a bit of less provided he uses digital economy," he added. 
 
Earlier, a group of ministers under Bihar deputy chief minister Sushil Modi, had worked out the cash back mechanism and had assessed that the revenue loss on account of it would be Rs 1,000 crore annually.
 
The GST Council also set up a six-member panel of ministers under Minister of State for Finance Shiv Pratap Shukla to look into the issues of the MSME sector.
 
Other members of the ministers' panel are Delhi Deputy Chief Minister Manish Sisodia, Bihar Deputy Chief Minister Sushil Modi, Assam Finance Minister Himanta Biswa Sarma, Kerala Finance Minister Thomas Isaac and Punjab Finance Minister Manpreet Singh Badal. The ministerial panel is expected to finalise its report within six weeks.
 
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Notably, in the pre-GST regime, small businesses with turnover of up to Rs 1.5 crore were exempt from excise duty.