Government Dismisses claims of GST on UPI Transactions Over ₹2,000

NEW DELHI: The Government has firmly dismissed claims implying the imposition of Goods and Services Tax (GST) on Unified Payments Interface (UPI) transactions exceeding ₹2,000. Officials said that these reports are completely false and have no factual background, reiterating that there is no such proposal under consideration at present.

GST is imposed only on specific charges, such as the Merchant Discount Rate (MDR), incurred on certain modes of payments. But from January 2020, the Central Board of Direct Taxes (CBDT) eliminated the MDR on Person-to-Merchant (P2M) UPI transactions, as per a Gazette Notification issued on December 30, 2019. Thus, as no MDR is currently imposed on UPI transactions, no GST is imposed on them either.

The Government continues to encourage development of digital payments through UPI. To further promote this initiative, an Incentive Scheme has been in place since the fiscal year 2021-22 to promote low-value P2M transactions. This scheme is meant to support small merchants by lowering the cost of transactions and promoting greater inclusion in digital payments.

The fund disbursements under this scheme have shown the Government's commitment, with payments of ₹1,389 crore in FY2021-22, ₹2,210 crore in FY2022-23, and estimated at ₹3,631 crore for FY2023-24. India had 49% of global real-time transactions in 2023, as per the ACI Worldwide Report 2024, showing its leadership in digital payment innovation. The values of UPI transactions have increased manifold, reaching ₹260.56 lakh crore by March 2025.

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