The government stated on Friday that it does not intend to impose GST on UPI transactions that exceed Rs 2,000. In response to rumours that the government is thinking of imposing GST on UPI transactions over Rs 2,000, the finance ministry clarified that the claims are untrue, deceptive, and unfounded. Charges associated with payments made using specific instruments, such as the Merchant Discount Rate (MDR), are subject to GST. With effect from January 2020, the CBDT eliminated MDR from UPI transactions between individuals and merchants. "Since currently no MDR is charged on UPI transactions, there is consequently no GST applicable to these transactions," stated the government. By March 2025, UPI transaction values had grown exponentially from Rs 21.3 lakh crore in 2019–20 to Rs 260.6 lakh crore.
The ministry added that the government is still dedicated to advancing UPI-based digital payments. Since FY2021–2022, an incentive program has been in place to help and maintain UPI's expansion, the statement stated. The promotion of UPI-based digital payments is reflected in the scheme's overall incentive awards.
By lowering transaction costs and encouraging greater involvement and innovation in digital payments, this program, which focuses on low-value UPI (P2M) transactions, helps small retailers. The government increased its payment under the scheme from Rs 2,210 crore in 2022–2023 to Rs 3,631 crore in 2023–2024.
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"The total incentive payouts under this scheme over the years reflect the government's sustained commitment to promoting UPI-based digital payments," stated the finance ministry.
India reaffirmed its position as a pioneer in digital payments innovation in 2023, accounting for 49% of worldwide real-time transactions, according to the ACI Worldwide Report 2024.