Is the Govt Planning to Impose GST on UPI Transactions Above ₹2,000?

New Delhi: The Union Finance Ministry on Friday dismissed media reports claiming the government is considering levying Goods and Services Tax (GST) on Unified Payments Interface (UPI) transactions above ₹2,000. It called the reports “completely false, misleading, and without any basis.”

No Proposal Under Consideration

“There is no such proposal before the government,” the Finance Ministry clarified in an official statement. The speculation had triggered concerns among digital payment users about potential charges on high-value transactions via UPI.

GST Not Applicable as No MDR on UPI

Currently, GST is applicable on certain payment-related charges, such as the Merchant Discount Rate (MDR). However, since January 2020, the Central Board of Direct Taxes (CBDT) removed MDR on person-to-merchant (P2M) UPI transactions.
“Since no MDR is being charged, consequently there is no GST applicable on UPI transactions,” the ministry reiterated.

Exponential Growth in UPI Transactions

The government highlighted the tremendous growth in digital payments through UPI, with the total transaction value rising from ₹21.3 lakh crore in FY 2019-20 to ₹260.56 lakh crore by March 2025.

Govt Support for Digital Payments Continues

To sustain this growth, the government introduced an incentive scheme from FY 2021-22 targeting low-value UPI (P2M) transactions. The scheme benefits small merchants by covering transaction costs and promoting wider adoption.

Incentives Worth Thousands of Crores Paid

The government disbursed ₹3,631 crore in FY 2023-24 under the scheme, a notable increase from ₹2,210 crore in FY 2022-23.
“These incentive payouts reflect the government’s sustained commitment to encouraging UPI-based digital payments,” the ministry emphasized.