New Delhi: The Finance Ministry has clarified that there are no plans to levy Goods and Services Tax (GST) on UPI transactions exceeding Rs 2,000. The ministry dismissed recent claims as “completely false, misleading, and without basis.”
Currently, GST is applied to charges related to payments made through specific instruments, such as the Merchant Discount Rate (MDR). However, the Central Board of Direct Taxes (CBDT) had removed the MDR on Person-to-Merchant (P2M) UPI transactions in a December 2019 Gazette Notification, which means there is no GST on UPI transactions as no MDR is being charged.
The Finance Ministry emphasized its commitment to supporting digital payments, particularly through UPI. It highlighted the Incentive Scheme launched in FY 2021-22, which targets low-value P2M UPI transactions, benefiting small merchants and encouraging the use of digital payments. Under this scheme, the government has allocated Rs 1,389 crore for FY2021-22, Rs 2,210 crore for FY2022-23, and Rs 3,631 crore for FY2023-24.
India’s push for digital payments has been fruitful, with the ACI Worldwide Report 2024 revealing that India accounted for 49% of global real-time transactions in 2023. The value of UPI transactions has grown significantly, increasing from Rs 21.3 lakh crore in FY 2019-20 to Rs 260.56 lakh crore by March 2025. Notably, P2M transactions have surged to Rs 59.3 lakh crore, indicating robust merchant adoption and rising consumer confidence in UPI-based payments.
GST is levied on charges, such as the Merchant Discount Rate (MDR), relating to payments made using certain instruments.
New Delhi: The Finance Ministry has clarified that there are no plans to levy Goods and Services Tax (GST) on UPI transactions exceeding Rs 2,000. The ministry dismissed recent claims as “completely false, misleading, and without basis.”
Currently, GST is applied to charges related to payments made through specific instruments, such as the Merchant Discount Rate (MDR). However, the Central Board of Direct Taxes (CBDT) had removed the MDR on Person-to-Merchant (P2M) UPI transactions in a December 2019 Gazette Notification, which means there is no GST on UPI transactions as no MDR is being charged.
The Finance Ministry emphasized its commitment to supporting digital payments, particularly through UPI. It highlighted the Incentive Scheme launched in FY 2021-22, which targets low-value P2M UPI transactions, benefiting small merchants and encouraging the use of digital payments. Under this scheme, the government has allocated Rs 1,389 crore for FY2021-22, Rs 2,210 crore for FY2022-23, and Rs 3,631 crore for FY2023-24.
India’s push for digital payments has been fruitful, with the ACI Worldwide Report 2024 revealing that India accounted for 49% of global real-time transactions in 2023. The value of UPI transactions has grown significantly, increasing from Rs 21.3 lakh crore in FY 2019-20 to Rs 260.56 lakh crore by March 2025. Notably, P2M transactions have surged to Rs 59.3 lakh crore, indicating robust merchant adoption and rising consumer confidence in UPI-based payments.
