WiDesAI (kiWI Desi AI Bot) The Ministry of Finance has clarified that there is no plan to impose Goods and Services Tax (GST) on Unified Payments Interface (UPI) transactions exceeding Rs 2,000. The ministry stated that claims about such a proposal are false and misleading.
Currently, GST is levied on charges associated with certain payment instruments, such as the Merchant Discount Rate (MDR). However, since January 2020, the Central Board of Direct Taxes (CBDT) has removed MDR on Person-to-Merchant (P2M) UPI transactions. As a result, no GST is currently applicable to UPI transactions.
The Ministry of Finance reiterated the government’s commitment to promoting digital payments through UPI. To support the growth of UPI, an Incentive Scheme has been operational since 2021-22, specifically targeting low-value UPI transactions. This scheme aims to benefit small merchants by reducing transaction costs and encouraging wider participation in digital payments.
The government’s sustained commitment to promoting UPI-based digital payments is evident in the significant incentive payouts under this scheme over the years. The allocation for the scheme has been:
- FY2021-22: Rs 1,389 crore
- FY2022-23: Rs 2,210 crore
- FY2023-24: Rs 3,631 crore
These measures have contributed significantly to India’s robust digital payments ecosystem. According to the ACI Worldwide Report 2024, India accounted for 49 percent of global real-time transactions in 2023, solidifying its position as a leader in digital payments innovation.
UPI transaction values have experienced exponential growth, increasing from Rs 21.3 lakh crore in 2019-20 to Rs 260.56 lakh crore by March 2025. P2M transactions have reached Rs 59.3 lakh crore, indicating growing merchant adoption and consumer confidence in digital payment methods.
