Finance Ministry Confirms No GST on UPI Transactions Above ₹2,000: What It Means for You

In a recent announcement, the Finance Ministry clarified its stance on UPI transactions, stating there are no plans to levy Goods and Services Tax (GST) on those exceeding Rs 2,000. The ministry emphasized that such claims are unfounded, labelling them misleading.

Currently, Goods and Services Tax is only imposed on Merchant Discount Rate (MDR) charges associated with specific payment methods. As of January 2020, MDR has been eliminated for Person-to-Merchant (P2M) UPI transactions, meaning no GST applies to these digital payments.

The government is committed to enhancing digital payment adoption through UPI, evidenced by an operational Incentive Scheme initiated in FY 2021-22. This scheme focuses on low-value P2M transactions, benefiting small merchants and encouraging innovation in the digital payments sector. Notably, the allocated amount has grown significantly, with Rs 1,389 crore in FY 2021-22, escalating to Rs 3,631 crore for FY 2023-24.

India’s digital payment landscape has flourished, with a report revealing that the country accounted for 49% of global real-time transactions in 2023. Furthermore, UPI transaction values skyrocketed from Rs 21.3 lakh crore in FY 2019-20 to an anticipated Rs 260.56 lakh crore by March 2025, showcasing the rapid adoption of digital payments across the nation.