The Ministry of Finance dismissed claims about levying a Goods and Services Tax (GST) on Unified Payments Interface (UPI) transactions over ₹2,000 on Friday, April 18, describing such reports as “completely false, misleading, and without any basis.” The government reaffirmed its commitment to promoting digital payments and clarified that no such tax would be imposed on UPI transactions.“There is currently no such proposal before the government,” an official statement read, putting to rest growing concerns among users and merchants regarding potential transaction costs on high-value digital payments.
While GST can apply to service charges like the Merchant Discount Rate (MDR) associated with certain payment methods, the government clarified that no MDR is charged on Person-to-Merchant (P2M) UPI transactions.
It added that the exemption has been in place since January 2020, following a Gazette Notification issued by the Central Board of Direct Taxes (CBDT) on December 30, 2019. Consequently, no GST is levied on these transactions.Continued push for digital paymentsReaffirming its commitment to promoting a cashless economy, the government highlighted the success of its UPI Incentive Scheme, which has been operational since FY2021-22. The scheme provides financial incentives to encourage low-value UPI P2M transactions, primarily benefiting small merchants by eliminating transaction costs and driving adoption.Incentive disbursements under the scheme have steadily increased:FY2021-22: ₹1,389 crore
FY2022-23: ₹2,210 crore
FY2023-24: ₹3,631 croreIndia leads in global real-time paymentsIndia’s digital payments infrastructure, led by UPI, continues to achieve global recognition. According to the ACI Worldwide Report 2024, India accounted for a remarkable 49% of all real-time transactions globally in 2023—cementing its leadership in digital payments innovation.UPI transaction volumes and values have surged in recent years. From ₹21.3 lakh crore in FY2019-20, UPI transactions have skyrocketed to ₹260.56 lakh crore as of March 2025.Person-to-Merchant transactions alone contributed ₹59.3 lakh crore, showing the growing confidence of both consumers and businesses in digital payment platforms.
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