No GST on UPI Transactions Over ₹2,000: Finance Ministry Debunks Rumors

Government clarifies there is no proposal to levy GST on UPI payments; reiterates commitment to promoting digital payments and merchant inclusion

New Delhi, April 19: The Ministry of Finance has dismissed viral claims that the government is planning to levy Goods and Services Tax (GST) on Unified Payments Interface (UPI) transactions above ₹2,000, calling them “completely false, misleading, and baseless.”

In an official statement released Friday, the ministry confirmed that there is no such proposal under consideration and emphasized that no GST is applicable on UPI payments due to the absence of any Merchant Discount Rate (MDR) on these transactions.

“Since no MDR is charged on person-to-merchant (P2M) UPI transactions, there is consequently no GST applicable,” the statement clarified.

This comes amid widespread speculation on social media suggesting that GST might be imposed on high-value UPI transfers. The Finance Ministry stressed that GST, if applicable, is levied only on charges like MDR, which were removed for P2M UPI transactions through a CBDT Gazette Notification dated December 30, 2019.

Government Support for UPI

Reaffirming its commitment to a cashless and digitally empowered economy, the ministry highlighted several initiatives taken to promote UPI. Since 2021-22, the government has been running an Incentive Scheme for low-value UPI (P2M) transactions, especially aimed at supporting small merchants.

Incentive allocations under the scheme include:

• ₹1,389 crore in FY2021-22
• ₹2,210 crore in FY2022-23
• ₹3,631 crore in FY2023-24

“These measures have significantly contributed to India’s robust digital payments ecosystem,” the ministry noted.

India Leads Global Real-Time Payments

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

UPI’s transaction value has skyrocketed from ₹21.3 lakh crore in FY 2019-20 to ₹260.56 lakh crore as of March 2025. Notably, P2M transactions alone reached ₹59.3 lakh crore, showcasing widespread adoption among consumers and merchants alike.

The ministry urged citizens to rely only on official sources and avoid spreading misinformation that could create unnecessary confusion about the digital payment ecosystem.