Several payment companies, including BillDesk and CCAvenue, have received goods and services tax demand notice for the fee they charged merchants for digital transactions under Rs 2,000, The Economic Times reported on September 7 citing sources.

This was confirmed to the newspaper by joint managing director of Infibeam Avenues Vishwas Patel Payments processor CCAvenue is operated by Infibeam Avenues. Patel said the firm has received a show cause-cum-demand notice from the GST authorities.

Officials are demanding tax from the financial year 2017-18 when the GST regime was implemented, ET said. According to the report, the dispute is only on payments done through debit, credit cards and net banking, while transactions via UPI and RuPay cards are exempt from such taxes.

However, industry executives claim that the government had issued a notification during demonetization that asked aggregators, who provide payment support to retail and online merchants, to not charge GST for transactions up to Rs 2,000, the newspaper said.

The development comes two days ahead of the GST Council meeting, where it is expected to clarify whether GST of 18 percent should be levied on digital payments of less than Rs 2,000 made through payment aggregators such as Pine Labs and Razorpay, CNBC-TV18 reported on September 6 citing sources.

Currently, payment aggregators, who see digital payments such as QR scanning, POS machines, and net banking, are exempt from GST on transactions below Rs 2,000. A final decision will be taken by the GST Council on the recommendation of the rate fitment committee, the report added.