No GST on UPI Transactions Over ₹2,000: Government Debunks Rumours, Reaffirms Support for Digital Payments

New Delhi, April 18: The Government of India has categorically denied claims suggesting that Goods and Services Tax (GST) will be levied on Unified Payments Interface (UPI) transactions exceeding ₹2,000, terming such reports as false, misleading, and completely baseless.

In an official clarification, the government stated that there is no proposal under consideration to impose GST on UPI transactions. “These claims are without any foundation,” the statement emphasized, quelling speculation circulating on social media and other platforms.

Currently, GST is applicable only on specific payment-related charges such as the Merchant Discount Rate (MDR). However, as per a Gazette Notification dated December 30, 2019, the Central Board of Direct Taxes (CBDT) abolished MDR on Person-to-Merchant (P2M) UPI transactions starting January 2020. Since MDR is no longer levied on such transactions, no GST is applicable.

Government’s Incentive Scheme Promoting UPI

Reaffirming its commitment to the growth of India’s digital payment infrastructure, the government highlighted its ongoing Incentive Scheme for UPI-based low-value transactions (P2M), which has been in operation since FY 2021-22. This scheme benefits small merchants by offsetting transaction costs and driving innovation in digital payments.

The financial allocations under the incentive scheme over the years underscore this support:

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

These incentives have played a key role in India’s digital payments boom, encouraging widespread merchant adoption and fostering consumer trust.

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

The value of UPI transactions has grown exponentially over the years:

• From ₹21.3 lakh crore in FY 2019-20
• To ₹260.56 lakh crore by March 2025

Of this, P2M transactions alone contribute ₹59.3 lakh crore, reflecting rising participation from both merchants and consumers.

The government has urged citizens to refrain from believing or spreading misinformation, particularly in areas impacting national financial systems and digital adoption. It reiterated that digital payments, especially UPI, will remain free and supported.

The clarification assures stakeholders that India’s digital economy will continue to thrive under a pro-innovation, pro-consumer policy environment, further strengthening the country’s journey toward becoming a digitally empowered society.