No GST on UPI Transactions Above ₹2,000, Confirms Government: “No Such Proposal Exist”
The Government of India has issued a firm clarification on Friday, April 18, 2025, dismissing reports that suggested GST would soon be levied on Unified Payments Interface (UPI) transactions exceeding ₹2,000. The Finance Ministry labeled these claims as “entirely baseless, misleading, and factually incorrect.”
In an official statement, the Ministry made it unequivocally clear:
“Currently, there is no such proposal under consideration by the government.”
The clarification comes amid a wave of public concern following speculative media coverage implying the introduction of GST on higher-value UPI transactions.
No MDR, No GST
GST on digital payments is typically applied to service charges like the Merchant Discount Rate (MDR). However, MDR was waived off for person-to-merchant (P2M) UPI transactions starting January 2020 by the Central Board of Direct Taxes (CBDT). As a result, there is no GST involved in such transactions.
“Since no MDR is currently charged on UPI transactions, there is no GST applicable,” reiterated the Ministry.
UPI: Fueling India’s Digital Payment Revolution
UPI continues to be a cornerstone of India’s digital economy. The scale of adoption is striking—UPI transaction volumes surged from ₹21.3 lakh crore in FY 2019–20 to ₹260.56 lakh crore by March 2025. This exponential growth underscores the platform’s popularity and trust among users and merchants alike.
To further strengthen digital inclusion, the government has been actively incentivizing low-value UPI transactions through a targeted scheme that began in FY 2021–22. This program specifically supports P2M transactions by small vendors and retailers, making digital payments more accessible and sustainable.
Government’s Commitment Remains Strong
Under the UPI incentive scheme:
- ₹2,210 crore was disbursed in FY 2022–23
- ₹3,631 crore was disbursed in FY 2023–24
These payouts, according to the Ministry, highlight the government’s unwavering commitment to building a cashless economy and fostering innovation in digital payments.
“The total incentive payouts under this scheme over the years reflect the government’s sustained commitment to promoting UPI-based digital payments,” the Ministry emphasized.
This statement puts to rest any speculation about the imposition of GST on UPI transactions and reaffirms the government’s vision of a digitally empowered India.
