No GST on UPI Transactions Above ₹2000: Government Clarifies False Claims

There has been a viral claim circulating on social media and various platforms that the government is considering imposing a Goods and Services Tax (GST) on UPI transactions exceeding ₹2000. However, the Ministry of Finance has dismissed these claims as completely false, misleading, and baseless.

The Finance Ministry clarified on Friday that there is no such proposal under consideration. They emphasized that GST is only applicable on charges related to service fees (like Merchant Discount Rate - MDR), which is levied by payment gateways or financial intermediaries.

Why There’s No GST on UPI Payments

Since January 2020, the Central Board of Direct Taxes (CBDT) removed the MDR on P2M (Person to Merchant) UPI transactions, meaning no additional charge is levied on these payments. Therefore, the question of imposing GST on UPI payments does not arise.

Government's Focus on Promoting Digital Payments

The government's primary goal is to further encourage the use of digital payment methods, especially UPI, which has revolutionized the payment landscape in India. As part of this effort, the government launched the UPI Incentive Scheme in FY 2021-22 to incentivize small merchants and encourage P2M transactions for smaller amounts.

Here’s how much has been invested under the scheme:

• FY 2021-22: ₹1,389 crore

• FY 2022-23: ₹2,210 crore

• FY 2023-24: ₹3,631 crore

These incentives are part of the government’s push to promote cashless payments and boost financial inclusion.

India Leading in Digital Payments

India is rapidly becoming a global leader in digital payments. According to the ACI Worldwide Report 2024, India will account for 49% of global real-time transactions in 2023, marking a significant milestone in the country's digital payment journey. The growth in UPI transaction volumes is equally impressive, jumping from ₹21.3 lakh crore in FY 2019-20 to an estimated ₹260.56 lakh crore by March 2025. Of this, P2M transactions alone are expected to reach ₹59.3 lakh crore, highlighting the increasing trust in UPI.

Conclusion

To sum it up, the government has no plans to introduce GST on UPI transactions over ₹2000, and the news circulating about this is false. The government continues to support and encourage digital transactions, making them more accessible to the general public, especially small merchants.