GST Council Defers ITC Proposals, Approves UPI Rate Cut

The Goods and Services Tax Council has deferred two significant proposals relating to input tax credit (ITC) mechanisms, according to officials familiar with the proceedings. The deferral suggests the council requires additional time to examine the complex implications of these ITC-related measures before reaching a consensus among member states.

Despite the postponement of the two proposals, the council advanced its broader agenda by approving remaining items under consideration. Among the approved measures was a decision to cut the merchant discount rate (MDR) for Unified Payments Interface transactions, a move designed to enhance the competitiveness and accessibility of digital payment infrastructure across India.

The reduction in UPI MDR rates is expected to benefit both merchants and consumers by lowering transaction costs associated with digital payments. The approval reflects the council's continued focus on promoting cashless transaction adoption and strengthening India's digital economy infrastructure.

The deferment of the ITC proposals indicates the council's cautious approach to tax policy modifications that could have far-reaching implications for businesses and government revenue. Further deliberations on these matters are expected at subsequent council meetings, where member states will have additional opportunity to review technical assessments and fiscal impacts.