'We are not considering levying GST on UPI transactions over Rs 2,000', says Indian govt

The Indian government has clarified that it is not considering levying GST on UPI transactions above Rs 2,000. The remarks came in response to media reports claiming that the government is considering levying Goods and Services Tax (GST) on UPI transactions over Rs 2,000.

"The claims...are completely false, misleading, and without any basis. Currently, there is no such proposal before the government," the Finance Ministry said.

The ministry further said GST is levied on charges, such as the merchant discount rate (MDR), relating to payments made using certain instruments.

"Effective January 2020, the Central Board of Direct Taxes (CBDT) has removed the MDR on Person-to-Merchant (P2M) UPI transactions through the Gazette Notification dated 30th December 2019. Since currently no MDR is charged on UPI transactions, there is consequently no GST applicable to these transactions," the ministry said.

Focused on promoting UPI

The government said it remains committed to promoting digital payments through UPI. To support and sustain the growth of UPI, an incentive scheme has been in place since fiscal year 2021–22. This scheme specifically targets low-value UPI (P2M) transactions, benefiting small merchants by reducing transaction costs and encouraging broader participation and innovation in digital payments.

The total incentive payouts under the scheme over the years reflect the government's continued commitment to UPI-based digital payments, with allocations of Rs 1,389 crore in FY 2021–22, Rs 2,210 crore in FY 2022–23, and Rs 3,631 crore in FY 2023–24.

Rising digital payments growth

According to the ACI Worldwide Report 2024, India accounted for 49% of global real-time transactions in 2023, reaffirming its position as a global leader in digital payments innovation.

UPI transaction values have seen an exponential increase, growing from Rs 21.3 lakh crore in FY 2019-20 to Rs 260.56 lakh crore by March 2025. Specifically, P2M transactions have reached Rs 59.3 lakh crore, reflecting growing merchant adoption and consumer confidence in digital payment methods.