Delhi Stands Against GST on Small Online Transactions, Research Grants

Delhi Finance Minister Atishi stated on Sunday that the AAP government will oppose the Centre's alleged plan to impose GST on payment gateway transactions below Rs 2,000 and research grants. The GST Council, chaired by Union Finance Minister Nirmala Sitharaman and comprising state ministers, is set to discuss various issues on Monday, including taxation of insurance premiums and rate rationalisation suggestions from the Group of Ministers (GoM).

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Atishi highlighted that the decision to levy GST on online transactions under Rs 2,000 would severely impact numerous startups and small businesses nationwide. She emphasised that this move by the BJP-led central government would place an excessive financial burden on the entrepreneurial community.

Impact on Startups and Small Businesses

The minister explained that the Aam Aadmi Party (AAP) believes implementing such a tax on smaller transactions will hinder the growth and development of the startup ecosystem. It would also negatively affect the operations of small-scale enterprises. She pointed out the contradiction in the central government's stance, which claims to promote digital transactions and a cashless economy while proposing this new tax.

Atishi elaborated that currently, online purchases below Rs 2,000 made using debit cards, credit cards, or net banking are exempt from GST. Transactions exceeding Rs 2,000 attract an 18 per cent GST on payment gateway fees. This means small online purchases through payment gateways like Razorpay, CCAvenue, or BillDesk will now be taxed.

Concerns Over Research Grants

Atishi also mentioned that they would oppose GST on research grants during the meeting. She argued that no country in the world imposes GST on research grants given to educational institutions because research is seen as an investment in national progress rather than a business.

She noted that developed countries invest a significant portion of their GDP in research. However, under the BJP's rule over the past decade, India's research budget has been slashed from Rs 70,000 crore to Rs 35,000 crore. Atishi claimed that six educational institutions, including IIT-Delhi and Punjab University, received GST notices amounting to Rs 220 crore.

The minister criticised the government's approach of reducing the research budget while imposing GST on educational institutions receiving research grants from private entities. She asserted that this is entirely wrong and demanded that research grants given to educational institutions be exempted from GST.

The GST Council's meeting will also cover other significant topics such as taxation of insurance premiums and a status report on online gaming. The council's decisions could have far-reaching implications for various sectors across India.

Atishi's statements reflect growing concerns among state governments about the Centre's policies impacting local businesses and educational institutions. The outcome of Monday's GST Council meeting will be closely watched by stakeholders nationwide.