The Government today stated that claims suggesting it is considering levying GST on UPI transactions over two thousand rupees are completely false, misleading, and without any basis. In a statement, the Finance Ministry clarified that currently, no such proposal is under consideration by the Government.
It added that GST is levied only on charges, such as the Merchant Discount Rate (MDR), related to payments made using certain instruments. The Ministry further noted that, effective from January 2020, the Central Board of Direct Taxes (CBDT) removed the MDR on Person-to-Merchant (P2M) UPI transactions through a Gazette Notification.
Since no MDR is currently charged on UPI transactions, there is no GST applicable to these transactions either. The Finance Ministry reiterated that the Government remains committed to promoting digital payments through UPI. To support and sustain the growth of UPI, an Incentive Scheme has been operational since the Financial Year 2021-22.