No GST on UPI Transactions Over Rs 2,000, Clarifies Government

21 Apr 2025 CW Team

The Government has firmly dismissed claims that it is considering levying Goods and Services Tax (GST) on UPI transactions exceeding Rs 2,000, calling them completely false and misleading. The Ministry clarified that no such proposal is under consideration.

GST, it stated, is only applicable to specific charges like the Merchant Discount Rate (MDR). However, since January 2020, MDR has been eliminated for Person-to-Merchant (P2M) UPI transactions, as per a CBDT Gazette Notification dated 30th December 2019. As no MDR is charged, no GST is applicable on such transactions.

Reiterating its commitment to digital payments, the Government highlighted the UPI Incentive Scheme, operational since FY 2021-22, aimed at encouraging small-value P2M transactions and supporting small merchants.

Incentive allocations over the years:

• FY 2021-22: Rs 13.89 billion

• FY 2022-23: Rs 22.10 billion

• FY 2023-24: Rs 36.31 billion

These initiatives have strengthened India’s digital payments ecosystem. As per the ACI Worldwide Report 2024, India accounted for 49% of global real-time transactions in 2023. UPI transaction value surged from Rs 21.3 trillion in FY 2019-20 to Rs 260.56 trillion by March 2025, with P2M transactions alone reaching Rs 59.3 trillion, underscoring widespread adoption and trust.

(PIB)

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