In an effort to encourage the wider use of digital payment methods, the Indian government has announced that it will provide incentives to banks for promoting RuPay debit cards and BHIM-UPI transactions. However, the good news for banks and customers alike is that these incentives will not be subject to the Goods and Services Tax (GST).
This comes as a result of the Payments and Settlements Systems Act, 2007, which prohibits banks and payment system providers from charging any amount from a person making or receiving payments through RuPay debit cards or BHIM-UPI. The GST exemption, therefore, provides an additional advantage for banks and consumers to use these digital payment methods.
The government’s move to incentive RuPay and BHIM-UPI usage is part of a larger effort to boost digital transactions and move away from traditional, cash-based transactions. The incentives offered to banks for promoting these digital payment methods aim to increase the number of transactions being made and to provide a convenient and secure digital payment experience for customers.
RuPay, a domestic card payment network, has been developed by the National Payments Corporation of India (NPCI) to provide a cost-effective and secure alternative to international payment networks such as Visa and Mastercard. On the other hand, BHIM-UPI is a real-time payment system that allows instant transfer of money between bank accounts through a mobile phone.
In addition to being free of charge, RuPay and BHIM-UPI offer several benefits to customers, including instant confirmation of transactions, a secure platform, and a seamless user experience.
With the GST exemption on government incentives for promoting RuPay and BHIM-UPI transactions, banks and customers alike have even more reasons to switch to these digital payment methods. The government’s efforts to encourage digital transactions and move away from cash-based transactions are sure to positively impact the Indian economy and bring the country one step closer to a cashless future.