Page 11 - Banking Finance May 2025

ROUNDUP

Under GST, ITC refers to taxes paid by
businesses on purchases, which can be
deducted from final tax liability. Fake
ITC claims have been a persistent chal-
lenge, as fraudsters set up shell firms
solely to exploit the credit mechanism.

Ò»©­ IMD Forecasts 'Above Nor-

mal' Monsoon for Most of
India in 2025

India is likely to experience an 'above
normal' southwest monsoon this year,
according to the India Meteorological
Department (IMD) in its first forecast
Government Clarifies No GST on UPI Transactions for the 2025 rainy season. The forecast
Above Rs 2,000 holds significant importance as it di-
The Ministry of Finance has categorically denied rumours suggesting that rectly impacts the sowing of Kharif
Goods and Services Tax (GST) would be imposed on Unified Payments Inter- crops and supports rural economic
growth.
face (UPI) transactions exceeding Rs 2,000. In an official statement via the
Press Information Bureau (PIB), the government stated, "The claims that The IMD stated there is a 59% prob-
the Government is considering levying Goods and Services Tax (GST) on UPI ability that the monsoon rainfall will
transactions over Rs 2,000 are completely false, misleading, and without fall into the 'above normal' category.
any basis." However, some areas like northeast
India, Tamil Nadu, and parts of Bihar
The clarification further noted, "The government remains committed to
may experience 'below normal' rain-
promoting digital payments via UPI."
fall.
Currently, GST is only applicable on certain service charges like the Mer-
Most other regions, including the cru-
chant Discount Rate (MDR), but since January 2020, MDR has been removed
cial 'monsoon core zone'-where farm-
on Person-to-Merchant UPI transactions. Consequently, no GST applies.
ers depend on rainfall for agriculture-
The ACI Worldwide Report 2024 highlighted that India accounted for 49% are expected to receive higher-than-
of global real-time transactions in 2023, cementing its global leadership in average precipitation.
digital payments. A strong monsoon season not only
boosts farm output but also strength-
Rs 61,500 Crore Fake ITC Over the past two years (2023-24 and ens the broader economy, where a
2024-25), 42,140 fake firms were un- large segment of the population re-
Fraud Busted in FY25, 168
earthed, involved in fraudulent ITC mains dependent on agriculture and
Arrests Made claims exceeding Rs 1.01 lakh crore, allied activities.

In the fiscal year 2024-25, Central and leading to 316 arrests and Rs 3,107
State GST officers detected 25,009 crore in recoveries. India's First Climate
fake firms fraudulently passing input An official stated, "The Central and Change Research Station
tax credit (ITC) worth Rs 61,545 crore, State Governments and GSTN have Inaugurated in Jammu and
officials said. During the same period, taken various steps to prevent fake ITC
Rs 1,924 crore was recovered through claims, including providing intelligence Kashmir
blocking ITC, and 168 persons were inputs, detecting fraudulent registra- Union Minister Jitendra Singh inaugu-
arrested. tion, and suspicious e-way bill activity." rated India's first-ever climate change

10 | 2025 | MAY | BANKING FINANCE