Exemption from GST on Gov. for Promoting RuPay and BHIM-UPI

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.