No GST on Govt incentive to banks for selling Rupay card, low-value BHIM-UPI transactions

The Funds and Settlements Methods Act, 2007 forbids banks and system suppliers from deducting quantities from an individual’s account when an individual makes or receives funds by way of RuPay Debit playing cards or BHIM-UPI transactions.


The Finance Ministry said the incentives paid by the federal government to banks for advancing RuPay debit playing cards and low-value BHIM-UPI transactions is not going to assist in growing GST income collections.

The Funds and Settlements Methods Act of 2007 disallows the method of charging an quantity from an individual’s account on the time of constructing or receiving cost by way of EuPay Debit playing cards or BHIM. 

Owing to the norms of the scheme, the federal government pays banks an incentive by taking as a proportion of the worth of the RuPay Debit card transactions and low-value BHIM-UPI transactions as much as Rs 2,000. 


In a round to the chief commissioners of GST, the Ministry stated the inducement shall be figured in as a subsidy immediately linked to the worth of the service and that it will not be represented as part of the taxable worth of the transaction with referencing the provisions given underneath the Central GST Act, 2017. 

By contemplating the suggestions of the Council, the incentives paid by MeitY (Ministry of Electronics and Info Expertise) to buying banks underneath the Incentive scheme for the promotion of RuPay Debit Playing cards and low-value BHIM-UPI transactions are reckoned as subsidies and thus not be taxable.  

Moreover, the CBIC clarified the applicability of GST on lodging companies offered by Air Pressure Mess to the personnel, if the above-mentioned companies equipped by Air Pressure Mess, Military mess, Navy mess, Paramilitary, and Police forces mess to their personnel, or any particular person aside from a enterprise entity are thought of as tax impartial. 

RuPay card

“It’s hereby clarified that lodging companies supplied by Air power Mess and different comparable messes, resembling Military mess, Navy mess, Paramilitary, and Police forces mess to their personnel or any particular person aside from a enterprise entity are coated by SI. NO. 6 of notification No. 12/2017 Central Tax (Fee) dated 28.06.2017 offered the companies equipped by such messes qualify to be thought of as companies equipped by Central Authorities, State Authorities, Union Territory or native authority,” the Ministry stated. 

With this element, just a few specified companies are being supplied on the postal division, and transportation equipped by Central or State Governments or native authorities to any particular person aside from enterprise entities are exempt from GST. 

RuPay Debit Card

Final week the Union Cupboard granted a scheme value Rs 2,600 crore incentive scheme for banks to advertise RuPay debit playing cards and low-value BHIM-UPI (Bharat Interface for Cash-Unified Funds Interface) transactions within the present monetary 12 months 2022-23.

The scheme was launched to bolster Level of Sale (PoS) gadgets and e-commerce transactions utilizing RuPay and UPI by offering monetary incentives to banks within the ongoing monetary 12 months. As well as, constructing a sturdy digital cost ecosystem by way of the technique of selling UPI Lite and UPI123PAY as economical and user-friendly digital cost choices. 

Additionally learn: GST Council meet 2022: No adjustments in tax charges