No Intention to Impose GST on UPI Transactions Exceeding Rs 2,000: Government
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Synopsis
The Finance Ministry of India has confirmed that there are no plans to impose GST on UPI transactions above Rs 2,000, dispelling rumors and emphasizing the government's commitment to digital payment growth through initiatives like the Incentive Scheme.
Key Takeaways
- The government is not planning to impose GST on UPI transactions over Rs 2,000.
- Current GST is applicable on Merchant Discount Rate (MDR) fees.
- No MDR is currently charged on UPI transactions.
- The Incentive Scheme supports small merchants and encourages digital payment innovation.
- India leads globally in real-time transaction volume through UPI.
New Delhi, April 18 (NationPress) The Finance Ministry clarified on Friday that the government is not contemplating any plan to impose Goods and Services Tax (GST) on UPI transactions surpassing Rs 2,000.
"The assertions that the government is deliberating on implementing GST on UPI transactions over Rs 2,000 are entirely unfounded, deceptive, and lacking any justification. Presently, there is no such proposal under consideration by the government," stated the Finance Ministry.
GST is applicable on fees like the Merchant Discount Rate (MDR) associated with payments made via specific instruments.
As of January 2020, the Central Board of Direct Taxes (CBDT) has abolished the MDR on Person-to-Merchant (P2M) UPI transactions, as per the Gazette Notification dated December 30, 2019.
Since there is currently no MDR imposed on UPI transactions, it follows that no GST is applicable to these transactions, as per the Ministry.
The government is dedicated to fostering digital payments through UPI. To ensure and enhance the growth of UPI, an Incentive Scheme has been in place since FY 2021-22. This initiative specifically focuses on low-value UPI (P2M) transactions, aiding small merchants by reducing transaction costs and encouraging broader participation and innovation in digital payments, as detailed in the official statement.
The statement highlighted that the total incentive disbursements under this initiative over the years illustrate the government's ongoing commitment to advancing UPI-based digital payments. The allocations under this scheme over the years include Rs 1,389 crore for FY2021-22, Rs 2,210 crore for FY2022-23, and Rs 3,631 crore for FY2023-24.
These initiatives have considerably strengthened India’s robust digital payments landscape.
According to the ACI Worldwide Report 2024, India represented 49 percent of global real-time transactions in 2023, reaffirming its status as a global frontrunner in digital payments innovation.
UPI transaction values have experienced remarkable growth, escalating from Rs 21.3 lakh crore in FY 2019-20 to Rs 260.56 lakh crore by March 2025. Specifically, P2M transactions have reached Rs 59.3 lakh crore, reflecting an increase in merchant acceptance and consumer trust in digital payment systems, the statement noted.
