Fact Check: Reports About Government Proposal to Charge GST on UPI Transactions Above ₹2,000 False – Finance Ministry Clarifies
New Delhi, April 18, 2025:
Claims circulating on social media and other platforms alleging that the Government is planning to impose Goods and Services Tax (GST) on UPI transactions exceeding ₹2,000 are entirely false, misleading, and baseless, according to an official clarification issued by PIB Delhi.
There is no such proposal under consideration, and the Government has reiterated its strong commitment to promoting digital payments through UPI (Unified Payments Interface).
What Is the Reality?
The GST is applicable only to specific charges, such as the Merchant Discount Rate (MDR), associated with certain payment instruments. However, in a significant move to encourage digital transactions, the Central Board of Direct Taxes (CBDT) had eliminated the MDR on Person-to-Merchant (P2M) UPI transactions through a Gazette Notification issued on December 30, 2019, which became effective from January 2020.
As no MDR is currently levied on UPI P2M transactions, no GST is applicable either.
Government Incentives to Promote UPI
To further bolster the growth of UPI, the Government launched an Incentive Scheme in FY 2021-22, aimed at promoting low-value P2M UPI transactions. This scheme directly supports small merchants by alleviating transaction costs, thereby fostering greater inclusion and innovation in India’s digital payment landscape.
Here are the annual allocations under the scheme:
- FY 2021-22: ₹1,389 crore
- FY 2022-23: ₹2,210 crore
- FY 2023-24: ₹3,631 crore
These substantial payouts underline the Government’s long-term commitment to nurturing and expanding the UPI ecosystem.
India: A Global Leader in Real-Time Payments
India’s strides in the digital payments space continue to earn global recognition. As per the ACI Worldwide Report 2024, India accounted for a staggering 49% of all global real-time transactions in 2023, securing its position as a world leader in digital payments innovation.
Explosive Growth in UPI Usage
The UPI platform has witnessed exponential growth in transaction volumes:
- FY 2019-20: ₹21.3 lakh crore
- FY 2024-25 (as of March): ₹260.56 lakh crore
Notably, P2M transactions alone now total ₹59.3 lakh crore, signaling strong adoption by merchants and increasing trust among consumers.
The Bottom Line:
The viral claim about GST on UPI transactions over ₹2,000 is completely untrue. There is no GST, no MDR, and no new tax proposal. In fact, the Government continues to invest heavily in UPI infrastructure to make digital transactions more accessible, affordable, and inclusive for all.
