Government Clarifies No GST on UPI Transactions Above ₹2,000

In response to circulating media reports, the Finance Ministry of India has categorically denied any plans to impose Goods and Services Tax (GST) on Unified Payments Interface (UPI) transactions over ₹2,000. The Ministry termed such claims as false, baseless, and misleading. Reinforcing the government’s commitment to promoting digital payments, the clarification emphasizes that no MDR (Merchant Discount Rate) is charged on person-to-merchant (P2M) UPI transactions, and thus no GST applies to such transactions either.

Key Highlights

No GST on UPI Transactions Above ₹2,000

• Finance Ministry Clarification: No proposal exists to levy GST on UPI transactions above ₹2,000.
• False Reports: Media reports suggesting GST plans are completely unfounded and misleading.
• No MDR on P2M UPI: Since January 2020, MDR has been removed on person-to-merchant UPI transactions.
• No GST Without MDR: GST applies only where there’s a charge like MDR; hence, no GST is applicable to UPI transactions.

Exponential UPI Growth

• FY 2019–20: ₹21.3 lakh crore
• FY 2024–25 (as of March): ₹260.56 lakh crore
• Government’s Commitment: The Ministry reaffirmed dedication to expanding digital payment infrastructure.

UPI Incentive Scheme

• Initiated in FY 2021–22 to promote low-value P2M UPI transactions.
• Encourages small merchants by easing transaction cost burden.

Incentive Payouts by Government

• FY 2022–23: ₹2,210 crore
• FY 2023–24: ₹3,631 crore
• Focus on Small Merchants: Incentive scheme supports financial inclusion and digital innovation at grassroots levels.

Summary/Static	Details
Why in the news?	Government Clarifies No GST on UPI Transactions Above ₹2,000
GST on UPI	> ₹2,000 No GST applicable
Finance Ministry Stance	No proposal; media reports are false
MDR Status (P2M UPI)	Abolished since January 2020
GST Applicability	Only if MDR or other charges exist
UPI Transaction Value FY20	₹21.3 lakh crore
UPI Transaction Value FY25	₹260.56 lakh crore (as of March 2025)
Govt UPI Incentive Scheme	Start FY 2021–22
Incentive Payout FY23	₹2,210 crore
Incentive Payout FY24	₹3,631 crore
Purpose of Incentive Scheme	Support low-value P2M UPI transactions
Focus of Govt	Promote digital payments & small merchants