pri FAQs on Incentive for Digital Payment under GST FAQs on Incentive for Digital Payment under GST

Since Honorable Shri Narendra Modi becomes P.M., he always wants India to be digitalize. Being a normal human being it is just a movement towards making India a digital nation but as a professional it is revolutionary movement and a long term plan of our P.M for collection of more taxes. Now few readers will confuse how digital payments will enhance tax revenue to Govt. Here is simple answer, more you spend digitally implies handsome earnings which automatically leads to pay more taxes.

Anyway, our Hon. Finance Minister, keeping ion view to cash less economy, added one more step towards this movement, under 27th GST council meeting, held on 4th May,2018 it is proposed that there will be 2% GST concession ( 1% each act i.e. CGST & SGST) (where tax rate is 3% or more) on B2C supplies, if payment is made through cheque or digital mode, subject to celling of Rs 100/- per transaction.

Now let us understand this with few FAQs:

FAQ 1: Mr. A wants to purchase AC worth Rs 35,000/- plus 28% GST i.e. 9,800/-, what amount Mr. A will have to pay for this purchase if he use this AC in his home.

Solution: If Payment in cash: Rs 44,800/- but if payment is made through cheque or digital mode then 2% concession on GST will be allowed i.e. now he will have to pay Rs 44,100/- i.e. 35,000/- plus 26% GST, but one need not forgot celling limit of Rs. 100/-per transaction therefore in this case Mr. A must pay Rs. 44,700/- for AC.

FAQ 2: What happened to above transaction if Mr. A purchase AC for his proprietorship business?

Solution: in this case he must pay Rs 44,800/- whatever the mode of payment i.e. either in cash or online.

FAQ 3: Mr. B purchased unworked precious stone worth Rs. 2,00,000/- plus 0.25% GST i.e. Rs 500/- , what amount Mr. B will have to pay for this transaction if he purchased for personal use?

Solution 3: He must pay full amount i.e. Rs. 2,00,500/-, means without concession because rate of GST is less than 3% , which is basic requirement of availing concession.

FAQ 4: Mr. C purchased one pizza for Rs. 400/- plus 5% GST i.e. Rs. 20/-, what amount will he have to pay?

Solution: If payment made in cash then Rs. 420/- but if through online mode then Rs. 412 i.e. Rs 400/- plus 3%. This means Rs 8/- benefit will be there which is under celling limit of concession.

FAQ 5: How will pizza shop will create invoice in above case assuming there is online payment by Mr. C?

Solution: They will charge Rs 400/- plus 1.5% CGST and 1.5% SGST.

FAQ 6: Is there any concession if there is IGST involved?

Solution: Council clearly mention B to C sale, which means there will not be any scope of concession if sale is made interstate, because in most of the cases B To C sale attracts Place of supply which is generally place of seller.

Analysis why this concession is given:

There must be two parameters one is crystal clear that our officials want India as digital nation the another one is to provide benefits to end user who cannot take credit of their purchases and which leads extra burden on pocket of consumer, this 2% concession will reduce some amount of burden on the consumer.


One must check all the aspects before allowing any concession i.e. mode of payment, nature of purchase, celling amount of concession and rate of GST on supply

Watch my You Tube channel “GST SATHI” for GST updates

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I am member of ICAI since Novemer, 2011. Having experience in Taxation and public speaking. i also posted few videos on you tube for GST. View Full Profile

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  1. Mayur says:

    Ceiling of Rs. 100 is not quite attractive to make the scheme successful.e.g. If you are giving a Rs. 100 Discount on Purchase of Rs. 45000 AC, its not much incentivized scheme for a consumer and also for the dealer. Dealer himself can give Rs. 200 Discount if AC purchased in Cash.

  2. Rohit says:

    in Q 5 you said, pizza owner will create the invoice as per 3 % GST
    how will you set the TWO GST RATES for single item in computerized billing
    it is possible in case of manual billing only

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July 2021