Government Denies GST on UPI Transactions Over Rs 2000

The government has firmly denied circulating reports about imposing GST on UPI transactions exceeding Rs 2,000, labeling such claims as "completely false, misleading, and without any basis."

Current Tax Framework Explained

In an official statement, the finance ministry clarified that there is currently no such proposal before the government. The ministry also detailed that GST is only applicable on charges like the merchant discount rate (MDR), which are relevant for certain payment methods.

UPI's Remarkable Growth

UPI, or Unified Payments Interface, has seen an explosive increase in usage, with transaction values jumping from Rs 21.3 lakh crore in 2019-20 to an estimated Rs 260.56 lakh crore by the end of March 2025. To support this growth, the government has been running an incentive scheme since 2021-22, aimed at low-value person-to-merchant (P2M) UPI transactions.

Government's Commitment to Digital Payments

The initiative is designed to assist small merchants by covering transaction costs, thereby encouraging wider adoption of digital payments. In the financial year 2023-24, Rs 3,631 crore was disbursed under this scheme, marking a significant increase from previous years.

The ministry emphasized, "The total incentive payouts under this scheme over the years reflect the government's sustained commitment to promoting UPI-based digital payments."