Govt Not Considering GST on UPI Transactions Above Rs 2,000, Says Finance Ministry

Ira Singh
Khabar Khabaron Ki,19 April ’25

The Ministry of Finance on Friday firmly dismissed reports suggesting the government is planning to levy Goods and Services Tax (GST) on Unified Payments Interface (UPI) transactions above Rs 2,000, calling them “completely false, misleading, and without any basis.”

In an official statement, the finance ministry clarified, “There is currently no such proposal before the government.” The clarification comes in the wake of social media speculation and news reports that claimed a new tax regime on high-value digital transactions was under consideration.

The ministry emphasized that GST is only applicable on certain service charges, such as the Merchant Discount Rate (MDR), which may be levied on payments made via some instruments. However, since January 2020, the Central Board of Direct Taxes (CBDT) has removed MDR charges on person-to-merchant (P2M) UPI transactions.

“Since currently no MDR is charged on UPI transactions, there is consequently no GST applicable to these transactions,” the ministry stated, putting to rest any confusion regarding taxation on digital payments.

UPI has become a major part of India’s digital payment system, with the total value of transactions growing from Rs 21.3 lakh crore in 2019-20 to an expected Rs 260.56 lakh crore by March 2025. To support this rapid growth, the government has been running a special scheme since 2021-22 to encourage small-value UPI payments, especially to help small shopkeepers.

According to information, in 2023-24, the government spent Rs 3,631 crore on this scheme, which is a big jump from Rs 2,210 crore the previous year. The finance ministry reportedly stated that this continued spending shows the government’s strong support for UPI and digital payments.

This clarification from the government comes as more and more people across both cities and villages in India are using UPI for quick, easy, and free digital payments.