MONEY
No GST on UPI transactions above Rs 2,000, Finance Ministry clarifies
- IBJ Bureau
- Apr 19, 2025
The Finance Ministry on Friday made it clear that the government is not considering any proposal to levy the Goods and Services Tax (GST) on UPI transactions over Rs 2,000.
“The claims that the Government is considering levying GST on UPI transactions over Rs 2,000 are completely false, misleading and without any basis. Currently, there is no such proposal before the government,” the Finance Ministry said.
GST is levied on charges, such as the Merchant Discount Rate (MDR), relating to payments made using certain instruments.
Effective January 2020, the Central Board of Direct Taxes (CBDT) has removed the MDR on person-to-merchant (P2M) UPI transactions through the Gazette Notification dated December 30, 2019.
Since currently no MDR is charged on UPI transactions, there is consequently no GST applicable to these transactions, the ministry said.
The government remains committed to promoting digital payments via UPI. To support and sustain the growth of UPI, an incentive scheme has been operational from FY21-22. This scheme specifically targets low-value UPI (P2M) transactions, benefiting small merchants by alleviating transaction costs and promoting wider participation and innovation in digital payments, the official statement added.
The statement pointed out that the total incentive payouts under this scheme over the years reflect the government’s sustained commitment to promoting UPI-based digital payments.
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