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The government clarified on Friday that it is not planning to charge GST on UPI transactions over Rs 2,000. The finance ministry called recent reports about this false and misleading.
GST is only applied to fees like the Merchant Discount Rate (MDR) on some payment methods. But since January 2020, the MDR has been removed for person-to-merchant UPI payments. So, there’s no GST on UPI transactions.
UPI usage has grown rapidly, rising from Rs 21.3 lakh crore in 2019-20 to Rs 260.6 lakh crore by March 2025.
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“The claims that the government is considering levying GST on UPI transactions over INR 2,000 are completely false, misleading, and without any basis. Currently, there is no such proposal before the government,” the ministry said in a statement.
“Since currently no MDR is charged on UPI transactions, there is consequently no GST applicable to these transactions,” the statement added.
The clarification came after some media reports claimed that UPI payments above Rs 2,000 in a single transaction might be taxed under GST to improve tax compliance and formalize digital payments.
However, since January 2020, there has been a zero MDR (Merchant Discount Rate) policy for RuPay debit cards and BHIM-UPI payments. This was made official through changes in the Payments and Settlement Systems Act, 2007, and the Income-tax Act, 1961.
Meanwhile, UPI has faced several outages in the past few weeks. In a recent meeting with major banks and third-party apps, NPCI asked them to be careful about making public statements on the issue. It explained that the problem was caused by a hardware issue at one of NPCI’s switches.
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