Finance Ministry clears air on GST over UPI transactions

New Delhi

The Ministry of Finance has clarified that there are no plans to impose Goods and Services Tax (GST) on UPI transactions exceeding Rs 2,000. The statement came in response to recent misleading claims regarding potential GST charges on such transactions.

The Finance Ministry emphasized that these claims are completely false and without basis. Currently, there is no proposal before the government to levy GST on UPI transactions. GST is applicable only to specific charges like the Merchant Discount Rate (MDR) for payments made using certain instruments. However, since the MDR on Person-to-Merchant (P2M) UPI transactions was removed in December 2019, no GST is applicable to these transactions.

The government remains committed to encouraging digital payments through UPI. To further support UPI's growth, an Incentive Scheme targeting low-value UPI transactions was introduced in 2021-22. This initiative, aimed at benefiting small merchants and reducing transaction costs, has significantly contributed to expanding India's digital payments ecosystem.

The Ministry also shared that total incentive payouts under the scheme have increased over the years, with Rs 1,389 crore allocated in FY2021-22, Rs 2,210 crore in FY2022-23, and Rs 3,631 crore in FY2023-24.

India’s digital payments landscape has grown substantially, with UPI transactions reaching Rs 260.56 lakh crore by March 2025, up from Rs 21.3 lakh crore in 2019-20, reflecting strong adoption and consumer trust in digital payments.