No GST will be charged on UPI transactions over Rs 2000; Government issues an official statement
Recently, rumors surfaced online that the government will impose Goods and Services Tax (GST) on Unified Payments Interface (UPI) transactions exceeding Rs 2,000. The Ministry of Finance has put a stop to these rumors by issuing an official statement that such claims are completely false, misleading, and without any basis.
The government clarified that effective from January 2020, the Central Board of Direct Taxes (CBDT) has removed the Merchant Discount Rate (MDR) on Person-to-Merchant UPI transactions through the Gazette Notification dated 30th December, 2019. And since currently there is no MDR charged on UPI transactions, there is consequently no GST applicable to these transactions.
Also, there has been no such proposal before the government. GST is only levied on charges such as MDR related to payments made using certain instruments.
Further it is also revealed that UPI transaction values have seen an exponential increase, growing from Rs 21.3 lakh crore in FY 2019-20 to Rs 260.56 lakh crore by March 2025. While P2M transactions have reached Rs 59.3 lakh crore, reflecting growing merchant adoption and consumer confidence in digital payment methods.
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