Introduction
Ministry of Electronics and Information Technology (MeitY) announces “Fintech Innovation Challenge for implementation of concession on GST component of payments made through digital modes i.e., RuPay (Debit card) and BHIM UPI”
It is proposed to provide 20% GST concession on the B2C transactions made through RuPay (Debit card) and BHIM UPI, subject to a total ceiling of Rs.100. The concession may be given to the consumers either in the form of instant cashback or upfront discount while making the payment.
Problem Statement
Implementation of discount/cashback as a percentage of GST amount to the consumer on transactions made through RuPay (Debit card) and BHIM UPI, subject to a ceiling of Rs.100.
Example: A customer purchases an item of value Rs.100 which falls in the 18% GST slab. The customer has to pay Rs.118 (Rs.100 + Rs.18). As per scheme, a discount of 20% on the GST amount is Rs.3.6 will be given to customer as instant cashback or discount. Hence, customer will either pay Rs.118 and get Rs.3.6 as instant cashback or will pay discounted amount Rs.114.4. Further, merchants need to file GST as per their existing process with either the reduced amount (Rs.14.4 instead of Rs.18) or they file complete GST amount, i.e.,Rs.18 (Rs.14.4 + Rs.3.6), the differential amount of Rs.3.6 may be reimbursed to the merchants.
Some of the important identifiers like GSTno., payable tax and discount amount to be captured for a UPI and RuPay(Debit card) transactions. GSTN should also be able to verify the discount/cashback details as and when required. NPCI, being the settlement/certifying institution, may need to store and share only relevant data as per the prevailing data protection policies.
Scope of the Fintech Innovation Challenge
The challenge will be conducted in three stages: In Stage-1, the focus will be on the idea and design, and in Stage-2, the focus will be on detailed implementation strategy and in Stage 3 a Proof of Concept (POC) to test/ verify the functionality of the proposed solution.
The solution should be proposed keeping in view the present payment ecosystem. Currently, merchants are using varied solutions for accepting digital payments with various billing options. Some of the sample scenarios prevailing in the merchant ecosystem are as under:
- Integrated billing and payment software
- Billing software with or without POS/other digital payment acceptance mode
- POS/other digital payment acceptance mode device for payment but no billing solution
- No billing or payment solution, etc.
Stage 1. Screening of applications received at MeitY Startup Hub(MSH) Portal.
The submission of concept paper for Stage-1 should encapsulate the design and process flow for implementing the scheme. The proposed solution should cover the following aspects:
- Overall structure and design for implementing the scheme
- Technology and architecture of the proposed solution
- Reversal/ timeout, cancellation/void, refund provisions
- Possible frauds and risks with mitigation measures
- Roles and responsibilities of various stakeholders
- Changes/modification in the current payment ecosystem
The proposed solution should cover complete payment cycle (from customer making a payment to merchant, completing the settlement cycle and storing of relevant details which may be verified by GSTN) including all the stakeholders in the payment ecosystem(P2M), such as Customer, Merchant, Acquiring/Issuing Bank, Switch (NPCI), Payment Service Provider (PSP), GSTN or any other players.
Stage 2. Top 10 entries from Stage 1 will enter Stage 2 for presentation and submission of detailed implementation strategy.
The submission of detailed document should include the following:
- Detailed implementation methodology with coverage on technology and architecture (message formats, APIs, database design, emerging technologies-based application, etc.)
- Effort estimates for the implementation of the solution
- Test cases covering all the possible scenarios
Stage 3. Top 3 entries of Stage 2 will be implementing and presenting Proof of Concept (PoC) to test/verify the working of their respective solution.
Evaluation criteria
The evaluation will be done by a committee constituted by MeitY. The solution will primarily be evaluated in respect of the following:
- Concept: Solution should be merchant and citizen centric keeping the complete ecosystem including NPCI, Banks, GSTN and PSPs.
- Technology design and efficiency: Scalable and responsive solution.
- Ease of implementation: The solution should be implemented within stipulated timeline & should be capable of handling maximum billing scenarios.
- Quality & User experience: Convenient user interface and simple navigation.
Awards & Recognition
- Recognition and certificate from MeitY for “innovative solution” for "GST linked tax incentive scheme for digital payments" for the top 10 entries selected from Stage-1.
- Cash reward of Rs 1 lakh each to the best three entries of the Stage-2.
- Amount of Rs 3 lakhs will be given to the entries who successfully demonstrate their PoC as per the evaluation committee.
