UPI Users Relax: No GST on Transactions Above ₹2,000, Government Confirms
The Finance Ministry has stated that reports claiming the government is thinking about applying GST on UPI transactions greater than ₹2,000 are both false and misleading without any factual basis.
News about GST: The Government stated on Friday (April 18, 2025) that it is not considering imposing GST on UPI payments exceeding ₹2,000.
The Ministry of finance on UPI GST addressed reports claiming the government plans to implement GST on UPI transactions exceeding ₹2,000 by stating they have no foundation and are completely misleading.
The government presently has no proposal of this nature pending before it according to the Ministry statement.
The government applies GST to fees including the Merchant Discount Rate (MDR) associated with specific payment instruments.
From January 2020 onwards the Central Board of Direct Taxes removed the Merchant Discount Rate for person-to-merchant UPI transactions.
The Ministry reported that the absence of MDR charges on UPI transactions results in no GST being applicable to such payments.
UPI transaction values experienced exponential growth rising from ₹21.3 lakh crore during FY 2019-20 to ₹260.56 lakh crore by March 2025.
The Ministry confirmed the government's ongoing dedication to enhance digital payment systems through UPI.
The government launched an incitement scheme in FY2021- 22 to help sustain UPI's growth. The scheme focuses on low- value UPI( P2M) deals to reduce sale costs for small merchandisers while expanding participation and invention in digital payments.
The government paid ₹3,631 crore under the scheme during 2023-24 while the payment stood at ₹2,210 crore in 2022-23.
The Ministry observed that the accumulated incentive payouts from this program demonstrate the government’s ongoing dedication to advancing UPI-based digital payments.
The Ministry of Finance announcement explained that the GST applies to fees like the Merchant Discount Rate (MDR) which are connected to payments through particular payment instruments. Starting January 2020 the Central Board of Direct Taxes (CBDT) abolished the Merchant Discount Rate (MDR) for Person-to-Merchant (P2M) UPI transactions as per the Gazette Notification released on December 30, 2019.
