The government on Friday denied reports suggesting GST levying on UPI transactions exceeding Rs 2,000, calling such claims “completely false, misleading, and without any basis.”
In an official statement, the finance ministry said, “Currently, there is no such proposal before the government,” dismissing concerns that had surfaced earlier.
The ministry also clarifyed the tax framework, explaining that GST is only applicable on charges like the merchant discount rate (MDR), which are relevant for certain payment methods.
However, in January 2020, the Central Board of Direct Taxes (CBDT) eliminated MDR on person-to-merchant (P2M) UPI transactions.
“Since currently no MDR is charged on UPI transactions, there is consequently no GST applicable to these transactions,” the ministry stated.
UPI, or Unified Payments Interface, has witnessed a remarkable surge in usage, with transaction values skyrocketing from Rs 21.3 lakh crore in 2019-20 to a soaring Rs 260.56 lakh crore, that was projected by the end of March 2025.
To further encourage this growth, the government has been running an incentive scheme since 2021-22, specifically aimed at low-value P2M UPI transactions. The initiative is designed to support small merchants by absorbing transaction costs and driving broader adoption of digital payments.
In the last financial year, 2023-24, Rs 3,631 crore was disbursed under this scheme, a sharp rise from Rs 2,210 crore in 2022-23. In FY 2021-2011, the allocation was Rs 1,389 crore.
“The total incentive payouts under this scheme over the years reflect the government’s sustained commitment to promoting UPI-based digital payments,” the ministry added.
The press release said that India accounted for 49 per cent of worldwide real time transactions in 2023, as per the ACI Worldwide report 2024.