Neutral impactEconomy
GST on MDR may reach GST Council
BusinessLine 1 hr ago·17 Sept 2026, 1:46 pm
The Central Board of Indirect Taxes and Customs (CBIC) has proposed a significant change to the Goods and Services Tax (GST) regime. The proposal suggests that the Merchant Discount Rate (MDR), which banks charge merchants for card transactions, will now be subject to GST. Crucially, the input tax credit (ITC) mechanism will be extended to merchants, allowing them to claim this credit against their own GST liabilities.
This move is a major shift in the current tax structure. Currently, the MDR paid by merchants is not eligible for ITC. By making the GST on MDR available as a credit, the government aims to reduce the overall tax burden on merchants. This is expected to lower the cost of digital payments for businesses, potentially encouraging more transactions through electronic means.
For investors, this policy change is a positive development for ITC. As one of the largest players in the banking and financial services space, a reduction in the tax burden on merchants could boost transaction volumes and improve the company's profitability. The stock is likely to react positively to this news, reflecting improved business prospects in the digital payments ecosystem.
Excerpt from BusinessLine
The government on Thursday said issues with GST on merchant discount rates (MDR) can be taken up by the GST Council. Meanwhile, the Central Board of Indirect Taxes & Custom (CBIC) has said that GST-registered merchant will be permitted full set-off of GST paid on MDR. As MDR is a financial service, the GST rate is 18…Read the original at BusinessLine
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Bull / bear label is derived from the article's AI sentiment — indicative, not advice. Prices may be delayed.
Key takeaways
- Concerns ITC (ITC).
- Category: Economy.
- Assessed as a significant, market-relevant update.
Why it matters
A meaningful update for ITC worth tracking. Use the price and stock snapshot to gauge how the market is responding.
