The exact terms and conditions of the arrangements between two parties are crucial in determining the GST implications. Price Waterhouse indirect tax partner Pratik Jain states that if the bank/UPI payment gateway commits certain payouts/other benefits to the e-portal for promoting use of their services, the same may qualify as a 'service liable to GST' (to the extent the benefit accrues to or is retained by the portal).

"Elaborate clauses in the agreement between the two parties dealing with promotion, co-branding and marketing activities could suggest that there is a provision of service by one entity to another, resulting in the levy of GST. For example, a reimbursement of the share of cash-back by the bank would be treated as a taxable marketing service," adds Gabhawalla.

Other models may also attract GST. "If the bank/UPI payment gateway partners with the seller/e-commerce platform under a co-branding arrangement (even if it does not involve any exchange of monetary consideration), it could be construed as a barter of services and be subject to GST," explains Jain. In such cases, the value of the transaction is often a contentious issue, adds an in-house expert of a shopping portal.

"However, if the bank/UPI payment gateway merely joins hands with the seller/e-portal, both work on an independent basis and offer discounts/incentives on their own account directly to the customer, there may be no GST implications. This is because, arguably, neither of the parties derive any benefit from the other. Clear cut language in the contractual documents is a must," states Jain. According to tax experts, the GST Council should examine these issues and come out with a clarificatory circular.