No GST on UPI Transactions Over ₹2,000, Clarifies Finance Ministry
NEW DELHI, April 18 — The Ministry of Finance on Friday dismissed reports suggesting that the government is planning to impose Goods and Services Tax (GST) on UPI transactions exceeding ₹2,000, calling such claims “false, misleading, and baseless.”
In an official statement, the ministry clarified that there is no proposal under consideration to levy GST on such transactions.
It explained that GST is only applicable on service charges such as the Merchant Discount Rate (MDR), which may apply to payments made through certain instruments. However, since January 2020, MDR has been removed for Person-to-Merchant (P2M) UPI transactions, as per a Gazette Notification issued on December 30, 2019, by the Central Board of Direct Taxes (CBDT). As a result, there is no GST applicable to UPI transactions.
Reaffirming its commitment to digital payments, the government highlighted an ongoing Incentive Scheme launched in 2021-22 to support and promote low-value P2M UPI transactions. This initiative aims to ease transaction costs for small merchants and encourage broader participation in digital payments.
The scheme has seen rising allocations over the years — ₹1,389 crore in FY2021-22, ₹2,210 crore in FY2022-23, and ₹3,631 crore in FY2023-24 — reflecting the government’s continued investment in the growth of UPI.
“These measures have significantly contributed to India’s robust digital payments ecosystem,” the Finance Ministry stated.
According to the 2024 ACI Worldwide Report, India accounted for 49% of global real-time digital transactions in 2023, underscoring its leadership in payment innovation. UPI transaction values have surged from ₹21.3 lakh crore in 2019-20 to ₹260.56 lakh crore by March 2025. Of this, P2M transactions alone reached ₹59.3 lakh crore, indicating growing merchant adoption and user trust in the system.
