Is Digital Transaction Taxable? GST impact on Online Transactions in India

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July 25, 2019

GST Impact on Online Transactions

Even though the government of India is encouraging people to use digital money more in place of real money, most people aren’t even aware that these online transactions are taxable. Want to know how much money you are paying as GST to banks for each of the transactions you perform online or through your mobile phone? Here you go.

GST rate on Online Transactions

The old service tax (which was 15%) on bank payments and online transactions has now been replaced by GST at the standard rate of 18%. This tax shall be applicable on the fee levied by banks on the online transactions performed by their users. That means users will now have to pay 18% GST taxation rate on their bank transaction fees. Let’s understand by the example of the State Bank of India (SBI).

GST charged by SBI

Here’s how SBI charges fees and GST on different types of bank transactions.

GST (+ transaction fee) on NEFT

National Electronic Fund Transfer (NEFT) is the most common type of bank transfers. It is a one-to-one transfer from an SBI account to an account of any other bank in India. There is no limit on the maximum amount you send via NEFT. The service can be used online as well as through any of the bank branches. SBI charges a fee on every NEFT transaction performed by their users, online or offline.

Transaction fee for NEFT through SBI Online

  • For online transactions up to Rs. 10,000: 1 rs. + GST 18% (of 1rs.)
  • For transactions from Rs. 10,001 to 1,00,000: 2 rs. + GST 18%
  • For transactions from Rs. 1,00,001 to 2,00,000: 3 rs. + GST 18%
  • For transactions above Rs. 2,00,000: 5 rs. + GST 18%

Transaction fees for NEFT through SBI Bank branch

  • For SBI bank branch transactions up to Rs. 10,000: 2.50 rs. + GST 18%
  • For transactions from Rs. 10,001 to 1,00,000: 5 rs. + GST 18%
  • For transactions from Rs. 1,00,001 to 2,00,000: 15 rs. + GST 18%
  • For transactions above Rs. 2,00,000: 25 rs. + GST 18%

GST (+ transaction fee) on RTGS

Real Time Gross Settlement (RTGS) is an instant money transfer facility through which one can make high-value transfers of Rs. 2 lakh or more.

Transaction fee for RTGS through SBI Online

  • For amount 2 to 5 lakh: 5 rs. + GST 18%
  • For amount above 5 lakh: 10 rs. + GST 18%

Transaction fee for RTGS through SBI Bank Branch

  • For amount 2 to 5 lakh: 25 rs. + GST 18%
  • For amount above 5 lakh: 50 rs. + GST 18%

GST (+ transaction fee) on IMPS

Immediate Payment System (IMPS) is an instant electronic fund transfer service. The funds are transferred instantly and transaction fees are usually higher. The maximum transaction limit in IMPS is 2 lakh rupees, and the facility can only be accessed online, as of now.

Transaction fee for IMPS through SBI Online

  • Transfers up to Rs. 1,000: No fee
  • From Rs. 1,000 to Rs. 10,000: 1 rs. + GST 18%
  • From Rs. 10,000 to Rs. 1,00,000: 2 rs. + GST 18%
  • From Rs. 1,00,000 to Rs. 2,00,000: 3 rs. + GST 18%

* IMPS facility cannot be used at bank branches.

GST (+ transaction fee) on payments via Mobile Wallets

There are a number of mobile wallets apps, such as Paytm, Phonepay, etc., that allow users to make money transfers to other users and even to bank accounts. Here’s the list of wallets along with their bank transaction fees.

  • Paytm to Paytm transfer: Free of cost
  • Paytm to bank transfer: 3% + GST
  • Mobikwik: 4% + GST
  • HDFC Payzapp: 2% + GST

Most other digital wallets charge the similar fee (2 to 4%) and GST on bank transactions. Some other wallets like Phonepe and Tezz allow bank transactions through UPI.

GST (+ transaction fee) on payments via Mobile Wallets

UPI (Unified Payment Interface) is a government facility in which users can transfer money from any bank account to any other bank account via Virtual Payment Address (VPA). The facility is being provided by most of the banks and some digital wallets in India. BHIM by the central government is also a UPI based digital wallet app.

UP transactions are completely free, as of now.

Recommended Post: GST impact on Banking Sector

Conclusion

The online and offline bank transactions have surely become a little costlier after the implementation of GST, but the cost is not very much as the transaction fee itself is not much. You can even avoid paying any fee by using UPI based apps like BHIM to perform free online money transactions.

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