‘Will oppose Centre’s plan to levy GST on online transactions, research grants’

New Delhi: Ahead of the 54th GST Council meeting scheduled for Monday, the Delhi government, under Chief Minister Arvind Kejriwal, is preparing to challenge two significant proposals by the Central government. The first concerns the imposition of GST on research

grants received by educational institutions, and the second involves a proposed GST levy on payment gateway transactions under Rs 2000.

Delhi Finance minister Atishi has strongly condemned the Central government’s decision to impose GST on research grants, describing it as detrimental to the advancement of science and education in India. In August, six major educational institutions, including IIT Delhi and Punjab University, received show-cause notices demanding a total of Rs 220 crore in GST for grants received from private sector sources.

Minister Atishi expressed her disapproval, stating, “No country in the world imposes GST on research grants. This is because research is not seen as a business but as an investment in the country’s progress.” She criticised the central government’s approach, emphasising that the reduction of the research budget from Rs 70,000 crore to Rs 35,000 crore over the past decade under the BJP-led administration further underscores the lack of support for academic research.

Atishi highlighted that developed countries invest heavily in research, citing Israel’s 4.94 per cent of GDP, Japan’s 3.82 per cent, and the US’s 2.83 per cent as examples. She criticised the Central government’s stance, noting that while it has reduced the research budget, it is now imposing GST on grants received from private sectors, which she believes is counterproductive.

“The Central government claims that research grants are liable for GST, which is fundamentally incorrect. Imposing GST on research grants is wrong, and the Delhi government strongly opposes this,” Atishi asserted. She announced that the Delhi government will demand the removal of GST on research grants and seek exemptions for educational institutions from GST.

The second contentious issue involves a proposal to levy 18 per cent GST on payment gateway transactions of less than Rs 2000. Atishi criticised this move as harmful to small businesses and start-ups, which rely heavily on online payment systems for their operations.

“At present, transactions under Rs 2000 through payment gateways are exempt from GST. However, the central government is proposing to impose 18 per cent GST on all such transactions,” Atishi explained. She pointed out that this new tax could significantly increase the operational costs for small businesses and start-ups, many of which rely on digital payment systems to facilitate sales.

Minister Atishi emphasised the importance of small businesses, stating, “Small businesses contribute 30 per cent of India’s GDP and account for 62 per cent of employment. Instead of supporting these businesses, the central government’s proposal will adversely affect them by imposing additional taxes.” She warned that this proposal would directly impact start-ups and small enterprises, many of which operate exclusively online.

“The Central government’s move to impose GST on small online transactions is hypocritical, given their rhetoric about promoting digital transactions and a cashless economy,” she added. The Delhi government plans to strongly oppose this proposal in the GST Council meeting, arguing that it will disproportionately affect small businesses and consumers who make frequent small transactions.

In conclusion, the Delhi government’s stance reflects a broader concern about the implications of GST policies on critical sectors like research and small businesses. By opposing these proposals, the Kejriwal administration aims to protect the interests of educational institutions and entrepreneurs, advocating for a more supportive and conducive economic environment.