‘False, misleading’: Government denies reports of levying GST on UPI transactions over Rs 2000

The government on Friday suggested reporting more than Rs 2,000 to GST on UPI transactions, “said such claims” completely wrong, misleading and without any basis.,
In an official statement, the Finance Ministry said, “Currently, there is no such proposal before the government,” dismissing the concerns that were revealed earlier.
The ministry also clarified the tax structure, stating that GST is only applied to fees such as merchant exemption rate (MDR), which are relevant to some payment methods.
However, in January 2020, the Central Board of Direct Tax (CBDT) terminated MDR on the person-to-CIRI (P2M) UPI transaction.
The ministry said, “Since no MDR is currently charged on UPI transactions, no GST is applied to these transactions,” the ministry said.
The UPI, or integrated payment interface, has seen a notable increase in use, has been skyrocketing with transactions values ​​at Rs 21.3 lakh crore in 2019-20, which had increased by Rs 260.56 lakh crore by the end of March 2025.
To further encourage this development, the government is running an incentive scheme from 2021-22, especially for the purpose of low-value P2 M UPI transactions. This initiative is designed to designed small traders by absorbing the cost of transactions and to adopt digital payments widely.
In the last financial year, in 2023-24, Rs 3,631 crore was distributed under this scheme, a sharp increase in 2022-23 from Rs 2,210 crore. In FY 2021-2011, the allocation was Rs 1,389 crore.
The ministry said, “Total incentive payments under this scheme have reflected the government’s continuous commitment to promote UPI-based digital payments in the last few years.”
The press release stated that India took 49 percent of the real time transaction worldwide in 2023, according to the ACI Worldwide Report 2024.