Will UPI Payments Above ₹2000 Attract 18% GST? Here’s the Truth Behind Viral Claim

A wave of confusion erupted on social media and some news platforms after reports suggested that the Union Government would start imposing 18% GST on UPI transactions above ₹2000.

Several users and media outlets misinterpreted a speculative article published by ET Now on April 18, further fueling the rumor.

What Triggered the Misinformation?

ET Now published a headline titled “GST on UPI payments or transactions above Rs 2000? What experts argue”. Though the article itself called the situation “hypothetical,” it sparked outrage among netizens. Anti-BJP handles and opposition supporters widely circulated these claims, criticizing the government for allegedly burdening the taxpayers again.

A tweet from the handle @IndianGems_ gained traction and was reshared by others, including a pro-AAP account, accusing the government of double-taxing users on their own white money.

Here’s the Truth: No GST on UPI Transactions

Fact-checking the viral claim reveals that there is no proposal from the Union Government to impose GST on UPI transactions themselves, whether above ₹2000 or otherwise. The confusion stems from a misunderstanding of existing charges on specific types of UPI payments.

What Charges Actually Exist on UPI Payments?

Currently, most UPI transactions (over 99.9%) are completely free for users. However, a 1.1% service charge exists only on UPI payments made via Prepaid Payment Instruments (PPIs) such as digital wallets or credit cards linked to UPI — and only when the transaction exceeds ₹2000.

Important Points:

• The 1.1% fee is paid by the merchant, not the customer.
• This is not a GST, but a merchant discount rate (MDR) similar to what is already applicable on credit card transactions.
• As a service charge, it attracts 18% GST — but only on the MDR, not the transaction amount.

No Service Charge, No GST on Most UPI Transactions

For standard UPI transactions, including Peer-to-Peer (P2P) transfers (between individuals) and Peer-to-Merchant (P2M) payments (from customer to merchant), there are no service charges, hence no GST is applied.

The government continues to promote UPI usage as part of the Digital India mission, and imposing GST directly on transactions would be counterproductive to this initiative.

What About the GST Council’s Past Proposals?

There was a previous proposal by the GST Council to impose 18% GST on MDR of card transactions below ₹2000. However, this has not been implemented, and there is no such proposal for UPI transactions.

Final Verdict

The viral claim that 18% GST will be levied on UPI transactions above ₹2000 is false and misleading. The existing service charge and GST apply only to select PPI-based UPI payments made by merchants — not to users or standard UPI transfers.