Government Denies Claims Of GST On UPI Transactions Of Over Rs 2,000
The government has officially denied claims suggesting that Goods and Services Tax will be levied on Unified Payments Interface transactions exceeding Rs 2,000, as per a notice.
Terming such reports as "completely false, misleading, and without any basis", the government clarified that no such proposal is currently under consideration.
GST is levied only on specific charges, such as the Merchant Discount Rate, applicable to certain payment instruments. However, effective January 2020, the Central Board of Direct Taxes removed the MDR on Person-to-Merchant UPI transactions, as per a Gazette Notification dated 30th December 2019. Since there is no MDR on UPI transactions, GST is not applicable to them.
The government reiterated its commitment to promoting digital payments via UPI. To support this, an incentive scheme has been in place since fiscal 2022, aimed specifically at low-value P2M UPI transactions. The initiative is designed to benefit small merchants by reducing transaction costs and encouraging wider participation in digital payments.
Incentive allocations under the scheme have grown each financial year:
2022: Rs 1,389 crore
2023: Rs 2,210 crore
2024: Rs 3,631 crore
According to the ACI Worldwide Report 2024, India accounted for 49% of global real-time transactions in 2023.
UPI transaction values have surged from Rs 21.3 lakh crore in fiscal 2020 to Rs 260.56 lakh crore by March 2025. Of this, P2M transactions alone have reached Rs 59.3 lakh crore, reflecting rising adoption among merchants and consumers alike.
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