GST on UPI Payments Above ₹2,000? Here’s the Truth

New Delhi, April 18: The central government has categorically denied media reports suggesting a plan to impose Goods and Services Tax (GST) on Unified Payments Interface (UPI) transactions exceeding ₹2,000. In a strong statement on Thursday, the Ministry of Finance dismissed such claims as “completely false, misleading, and without any basis.”

The clarification followed widespread speculation in the media that an 18% GST might be levied on high-value digital payments through UPI to enhance tax compliance and expand the digital economy. Some reports inaccurately claimed that the government was mulling over taxing such transactions to align them with existing GST norms on digital services.

“There is no such proposal before the government,” the Finance Ministry said, quashing all speculation. It reiterated that the government remains fully committed to promoting digital transactions and ensuring that users are not burdened by additional costs.

CBIC Responds on Social Media

The Central Board of Indirect Taxes & Customs (CBIC) addressed the matter on social media platform X, reaffirming that no GST is applicable to UPI transactions since no charges like Merchant Discount Rate (MDR) are currently levied on them.

The CBIC post stated:

“The claims that the Government is considering levying GST on UPI transactions over ₹2,000 are completely false, misleading, and without any basis. Currently, there is no such proposal before the Government.”

It further clarified that:

• GST applies only to payment-related charges, such as MDR, when applicable.
• Since January 2020, the MDR on Person-to-Merchant (P2M) UPI transactions has been eliminated, as per a Gazette Notification issued on December 30, 2019.
• Consequently, no GST is charged on UPI transactions.

Government Support for Digital Payments

To encourage the adoption of digital payments, particularly low-value UPI transactions, the government has implemented an Incentive Scheme for UPI since FY 2021-22. The scheme supports small merchants by absorbing transaction costs and promoting innovation in the digital payment space.

Incentive allocations under the scheme include:

• FY 2021-22: ₹1,389 crore
• FY 2022-23: ₹2,210 crore
• FY 2023-24: ₹3,631 crore

These initiatives reflect the government’s continued investment in strengthening the UPI ecosystem.

India Leads in Digital Payments

According to the ACI Worldwide Report 2024, India accounted for 49% of all global real-time transactions in 2023, highlighting its leadership in the digital payments space.

The value of UPI transactions has soared from ₹21.3 lakh crore in FY 2019–20 to an estimated ₹260.56 lakh crore by March 2025. Of this, Person-to-Merchant (P2M) transactions now stand at ₹59.3 lakh crore, signaling growing merchant and consumer confidence in UPI.

Official Post and References

CBIC Statement on X:

The claims that the Government is considering levying GST on UPI transactions over ₹2,000 are completely false, misleading, and without any basis.

👉Currently, there is no such proposal before the government.

👉GST is levied on charges, such as the Merchant Discount Rate…

— CBIC (@cbic_india) April 18, 2025