CBIC said in an order that under the incentive scheme for promotion of RuPay debit cards and low value BHIM-UPI transactions, the government pays the acquiring banks an incentive as a percentage of value of transactions up to Rs.2000.

This incentive is in the nature of a subsidy directly linked to the price of the service and the same does not form part of the taxable value of the transaction as per law, CBIC explained.

The government's outlay for the subsidy scheme for promotion of RuPay debit cards and low-value BHIM-UPI transactions in the current financial year is ₹2,600 crore.

The clarification is issued based on the decisions of the GST Council meeting last month.

CBIC also explained that GST is not applicable on accommodation services supplied by the Air Force Mess to its personnel.

All services supplied by the Central Government, state governments, Union Territories or a local authority to any person other than business entities (barring a few specified services such as postal department services, transportation of goods and passengers etc.) are exempt from GST.

Therefore, accommodation services provided by Air Force Mess and other similar messes run by the Army, Navy, Paramilitary and Police forces to their personnel or any person other than a business entity do not attract GST, CBIC explained.

On Friday, CBIC had issued a set of instructions to senior field officers clarifying on the tax and cess rates applicable on items like sports utility vehicles (SUVs). The tax authority clarified that GST compensation cess at the rate of 22% is applicable on motor vehicles which satisfy all four specifications it has outlined--these vehicles are popularly known as SUVs, the engine capacity exceeds 1,500 cc, the length exceeds 4,000 mm and the ground clearance is 170 mm and above. This clarification is applicable only to SUVs.