GST on UPI transactions over Rs 2,000: Rumor or Reality?

The Ministry of Finance has categorically denied recent rumors suggesting that it is planning to impose Goods and Services Tax (GST) on Unified Payments Interface (UPI) transactions exceeding Rs. 2000. 

In a recent official statement issued by the Press Information Bureau (PIB), the Government clearly denied these claims and called them completely false, misleading and baseless. 

The statement mentions, “The claims that the Government is considering levying Goods and Services Tax (GST) on UPI transactions over Rs 2,000 are false, misleading and without any basis. Currently, there is no such proposal before the Government. With this statement, the government reassured UPI users and merchants alike that there is no such plan of levying GST on UPI transactions and further said, “The government remains committed to promoting digital payments via UPI.” 

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) removed the MDR on Person-to-Merchant (P2M) UPI transactions through the Gazette Notification dated 30th December 2019. 

At present no MDR is charged on UPI transactions, as a result, no GST is applicable to UPI transactions. 

The ACI Worldwide Report 2024 stated that India accounted for a massive 49% of global real-time transactions in 2023, reclaiming its position as a global leader in digital payments innovation.