FAQs on Incentive for Digital Payment under GST

Our Hon. Finance Minister, keeping in 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 ceiling of Rs 100/- per transaction.

Q.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 ceiling limit of Rs. 100/-per transaction therefore in this case Mr. A must pay Rs. 44,700/- for AC.

Q.2 What happened to above transaction if Mr. A purchases 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.

Q.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: 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.

Q.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 ceiling limit of concession.

Q.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.

Q.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 other 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, ceiling amount of concession and rate of GST on supply.

Join Whats App Group Check Your Tax Knowledge Product Demo