The government also said that it is committed to promoting digital payment via UPI and taking all possible steps for this.
New Delhi: Amid reports that the government is considering levying Goods and Services Tax (GST) on UPI (Unified Payments Interface) transactions over Rs 2,000, the Ministry of Finance has issued a clarification and stated that these claims are “completely false, misleading, and without any basis.” The ministry also said that GST is levied on charges, such as the Merchant Discount Rate (MDR), relating to payments made using certain instruments.
It is to be noted that the Central Board of Direct Taxes (CBDT) has removed the MDR on Person-to-Merchant (P2M) UPI transactions through the Gazette Notification dated 30th December 2019.
“Since currently no MDR is charged on UPI transactions, there is consequently no GST applicable to these transactions,” the notification reads.
Government Promoting Digital Payments
The government also said that it is committed to promoting digital payment via UPI. For this, there is an Incentive Scheme that is in place from FY 2021-22 to support the growth of UPI.
“This scheme specifically targets low-value UPI (P2M) transactions, benefiting small merchants by alleviating transaction costs and promoting wider participation and innovation in digital payments,” the government said.
Allocation Under This Scheme
FY2021-22: Rs 1,389 crore
FY2022-23: Rs 2,210 crore
FY2023-24: Rs 3,631 crore
India Global Leader In Digital Payments Innovation
UPI transaction values have seen an exponential increase, growing from Rs 21.3 lakh crore in FY 2019-20 to Rs 260.56 lakh crore by March 2025. Specifically, P2M transactions have reached Rs 59.3 lakh crore, reflecting growing merchant adoption and consumer confidence in digital payment methods.
According to the ACI Worldwide Report 2024, India accounted for 49 per cent of global real-time transactions in 2023, reaffirming its position as a global leader in digital payments innovation.
