Digital payments are popular, and the government is encouraging people to go cashless by promoting digital payments. In a novel move to promote UPI-based digital payments, the National Payments Corporation of India (NPCI) and the GST Council of India have agreed to provide GST credits to customers and shops who use UPI-based QR codes with poss charges. Digital payments in India have already started gaining momentum since the demonetization in 2016, and it is expected to take a great leap in the years ahead.
The government is taking these steps to promote digital payments to a larger population.
You may misplace the GST invoice that was issued or may need to keep copies of the same invoice. This would force you to contact the suppliers repeatedly. The QR code has solved this issue. By simply scanning the pay with QR code, you can generate your GST bills as many times as you want. The payment process is also hassle-free, and an added advantage is the cashback you will receive on your paid GST.
Follow this post to learn more about using UPI-based QR Codes to get GST benefits.
Are the Payments Made Through UPI-based QR Codes Beneficial?
Payments through UPI QR codes have recently gained popularity, and QR codes have become an easy way to collect payments. POS charges have also become a popular term in the digital payment system. Today, if you walk to a chai stall or take an autorickshaw, you can see the QR code to make the payment very quickly. Just fire up your UPI-supported apps, and you are ready to make the payment within a second. The UPI-based QR code has made the payment experience user-friendly and simplified for users and sellers.
The latest move to tie up the GST credits with the QR code effectively promotes digital payments in India and makes UPI a business tool. Integrating the input tax credit would help make people understand UPI and GST.
This move by the government will benefit the end customers and merchants greatly as they will get some portion of their GST back into their account in cashback. By simply sharing their PAN and GSTIN details, customers and merchants could claim their tax benefits as per the statement released by the NPCI committee panel. Recently, UPI has emerged as a popular payment method, and it has touched the 918 million mark in just one month’s transactions.
GST Incentives for Digital Payments
At the recent GST meeting, the GST Council of India announced that they would give incentives in cashback to all those who make payments by scanning the UPI QR code. The cashback announced is 20% of the GST component with a cap of Rs 100. The cashback provided would be directly credited into the consumer’s account linked with the Aadhar card.
Using the UPI QR codes and making payments additionally saves the POS charges the individual or business would have to pay while using a debit and credit card for the same payment.
This incentivization for digital payments initiative by the Indian Government was started on a pilot basis to promote its prime initiative, Digital India, on a large scale.
How do the UPI-based QR Codes Work?
The Unified Payment Interface (UPI) mainly works with the Virtual Payment Handle or a phone number linked to the consumer’s bank account. The QR codes also work on the same mechanism. QR codes are the two-dimensional bar codes that one scans to receive information.
A similar method is implemented while making payments through the UPI QR code. The VPA and bank information are integrated into the code, and the QR code is made available to take payments. To complete the transaction, the user simply scans the QR code.
Through this idea of giving back a part of the money paid by consumers as GST back to their accounts, the NPCI and the government of India aim to boost digital payments in India. It also aspires to promote the UPI QR code payment to gain the merchants’ mass compliance in this field. The amount of incentives provided is yet to be decided by NPCI and would be decided on the transaction amount.
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