Buzzflix In recent days, social media and news outlets were buzzing with rumors that the government might soon start imposing GST on UPI transactions exceeding ₹2,000. The speculation suggested that an 18% Goods and Services Tax (GST) would be levied on high-value digital payments through UPI (Unified Payments Interface).
But let’s cut through the noise and get to the truth.
No GST on UPI Payments: Government Clarifies
On April 18, 2025, the Ministry of Finance officially debunked the circulating reports, calling them “completely false, misleading, and without any basis.”
The ministry confirmed:
“There is no such proposal before the government.”
The government is committed to encouraging digital transactions and does not intend to burden users with additional charges on UPI payments.
📢 CBIC Clears the Air on Social Media
The Central Board of Indirect Taxes and Customs (CBIC) took to X (formerly Twitter) to put the rumors to rest:
🟢 No GST is applicable on UPI transactions.
🟢 Since January 2020, the Merchant Discount Rate (MDR) on Person-to-Merchant (P2M) UPI transactions has been abolished.
🟢 Hence, no GST applies unless there are payment charges involved—which isn’t the case here.
What is MDR and Why It Matters?
MDR is a small fee charged by banks/payment processors to merchants on digital payments. Since January 2020, the government has waived this fee for UPI P2M transactions via a Gazette Notification dated December 30, 2019.
As no MDR is levied, there’s no base amount on which GST can be applied—making the rumor baseless.
Government Incentives to Boost UPI
Rather than taxing UPI, the Indian government has been supporting it through a dedicated Incentive Scheme for UPI since FY 2021-22:
| Financial Year | Incentive Allocation |
|---|---|
| 2021–22 | ₹1,389 crore |
| 2022–23 | ₹2,210 crore |
| 2023–24 | ₹3,631 crore |
These incentives cover transaction costs for small merchants and promote innovation in digital payment systems.
India: A Global Leader in Digital Payments
As per the ACI Worldwide Report 2024, India accounted for 49% of all real-time digital transactions worldwide in 2023. That’s a staggering lead in the global digital economy!
- UPI transactions grew from ₹21.3 lakh crore in FY 2019–20
- Expected to reach ₹260.56 lakh crore by March 2025
- Of this, ₹59.3 lakh crore are Person-to-Merchant (P2M) transactions
Tech & AI Buzz—Latest Trends in Fintech and UPI Innovations
India’s Digital Payment Revolution: How UPI Changed the Game
No, there is NO GST on UPI payments above ₹2,000.
The government has no such proposal and, in fact, continues to back UPI through funding and innovation. So, continue using UPI confidently—it’s fast, free, and future-ready!
Stay Ahead with BuzzFlix!
Found this helpful? For more updates like this, bookmark BuzzFlix and get your daily dose of verified news, digital trends, and financial insights.
Visit Tech & AI Buzz now for the latest on UPI, fintech, and digital innovation.
