No GST on UPI Payments Over ₹2,000, Says Government
New Delhi, April 19: The central government has firmly denied recent media reports claiming that it is planning to impose Goods and Services Tax (GST) on Unified Payments Interface (UPI) transactions above ₹2,000. On Thursday, the Ministry of Finance labeled these reports as “completely false, misleading, and baseless.”
The denial came in response to speculation suggesting that the government might consider applying an 18% GST on large-value UPI payments to improve tax collection and streamline digital payment taxation. Clarifying the government’s position, the Finance Ministry stated, “There is no such proposal before the government,” and reaffirmed its commitment to encouraging digital payments without adding financial burdens on users.
CBIC Clarifies on Social Media
The Central Board of Indirect Taxes & Customs (CBIC) also addressed the misinformation on the social media platform X (formerly Twitter). In its post, the CBIC reiterated that UPI transactions remain free from GST since no Merchant Discount Rate (MDR) is charged. It emphasized:
- GST is applicable only on payment service charges like MDR, if levied.
- Since January 2020, MDR on Person-to-Merchant (P2M) UPI transactions has been abolished following a Gazette Notification issued on December 30, 2019.
- Therefore, UPI transactions do not attract GST charges.
Government Incentives for Digital Payments
To further promote digital transactions, especially among small merchants, the government has been running a UPI Incentive Scheme since the 2021-22 financial year. This initiative helps cover transaction costs and fosters innovation in digital payments.
Incentive allocations under the scheme were as follows:
- ₹1,389 crore in FY 2021-22
- ₹2,210 crore in FY 2022-23
- ₹3,631 crore in FY 2023-24
These efforts showcase the government’s active role in expanding and supporting the UPI infrastructure.
India Tops in Real-Time Digital Payments
According to the 2024 ACI Worldwide Report, India processed 49% of the world’s real-time digital payments in 2023, underlining its leadership in the digital payments sector.
The value of UPI transactions has witnessed a massive rise — from ₹21.3 lakh crore in FY 2019-20 to an estimated ₹260.56 lakh crore by March 2025. Notably, Person-to-Merchant (P2M) transactions have climbed to ₹59.3 lakh crore, signaling widespread acceptance and trust in the UPI system among both consumers and businesses.
The claims that the Government is considering levying GST on UPI transactions over ₹2,000 are completely false, misleading, and without any basis.
— CBIC (@cbic_india) April 18, 2025Currently, there is no such proposal before the government.
