The Finance Ministry has categorically rejected recent speculation that it is going to levy a Goods and Services Tax (GST) on Unified Payments Interface (UPI) transactions over Rs 2,000. In a statement issued by the Press Information Bureau (PIB) on Friday, the government termed such reports as “false, misleading, and without any basis.”
The clarification made it clear that as of now, there is no proposal in consideration to impose GST on UPI transactions. Assuring both the users and merchants, the Ministry reaffirmed its constant endeavor to push digital payments through the UPI system.
GST is levied only on some charges, like the Merchant Discount Rate (MDR), which are linked to particular modes of payment. But since January 2020, the Central Board of Direct Taxes (CBDT) has eliminated MDR on Person-to-Merchant (P2M) UPI transactions. The decision was notified in the Gazette on December 30, 2019.
Since MDR in UPI transactions is not present, GST does not apply on them, again affirming the government’s position. The prevailing system still allows easy and duty-free UPI-based transactions for consumers as well as business.
India’s drive towards a digital economy has been quite successful. India contributed to 49% of the world’s real-time transactions in 2023, as per the ACI Worldwide Report 2024. This success further establishes the country’s dominance in digital payment innovations and confirms its efforts to make digital transactions more convenient and affordable for its people.
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