In a strong rebuttal to recent media claims, the Government of India has clarified that there is no proposal to impose Goods and Services Tax (GST) on UPI transactions exceeding ₹2,000. The Ministry of Finance, through an official statement, labelled such reports as “false, misleading, and without any basis.”
The clarification aims to dispel widespread confusion stemming from speculative news suggesting a looming tax burden on high-value digital transactions. The Ministry reaffirmed that UPI payments remain GST-free, as no Merchant Discount Rate (MDR) is currently levied on them.
While GST applies to certain charges, such as MDR in some payment mechanisms, the Central Board of Direct Taxes (CBDT) had abolished MDR on person-to-merchant (P2M) UPI transactions starting January 2020. As a result, these payments continue to remain outside the ambit of GST.
Highlighting UPI’s growing significance in India’s digital economy, the Finance Ministry noted that UPI transaction volumes have surged from ₹21.3 lakh crore in FY 2019–20 to ₹260.56 lakh crore by March 2025.
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The government has been incentivising small merchants to adopt UPI through a targeted scheme launched in FY 2021–22. Under this initiative:
- ₹2,210 crore was disbursed in FY 2022–23
- ₹3,631 crore was disbursed in FY 2023–24
These figures, according to the Ministry, underscore the government’s unwavering commitment to foster a digital payment ecosystem that is cost-effective, inclusive, and scalable.
The Ministry reiterated that its efforts will continue to focus on enhancing the digital payment infrastructure and encouraging innovations that benefit both consumers and merchants alike.
