- No GST is being levied on UPI transactions above ₹2,000.
- GST applies only to charges like MDR, which is not applicable to UPI from January 2020.
- Incentive schemes continue to encourage UPI adoption, especially among small merchants.
- India leads the world in real-time transactions, with nearly half of global share.
- UPI transaction value touched ₹260.56 lakh crore in FY 2025, reflecting massive growth.
Source: PIB Press Release
The Government of India has strongly rejected circulating rumours about imposing Goods and Services Tax (GST) on UPI (Unified Payments Interface) transactions exceeding ₹2,000, calling such claims “completely false, misleading, and without any basis.”
Currently, there is no proposal under consideration to impose GST on UPI transactions.
Current GST Policy on Digital Payments
The government explained that GST is currently applied only to charges related to payment processing, specifically the Merchant Discount Rate (MDR) for certain payment instruments. However, since January 2020, the Central Board of Direct Taxes (CBDT) eliminated MDR charges on Person-to-Merchant (P2M) UPI transactions through a gazette notification dated December 30, 2019.
“Since currently no MDR is charged on UPI transactions, there is consequently no GST applicable to these transactions,” the official statement clarified.
Government Support for UPI Growth
To demonstrate its commitment to digital payments, the government highlighted its ongoing UPI Incentive Scheme, operational since the Financial Year 2021-22. This program specifically supports low-value UPI transactions for Person-to-Merchant payments, helping small businesses reduce transaction costs.
UPI Incentive Scheme Allocations
| Financial Year | Allocation Amount |
|---|---|
| FY 2021-22 | ₹1,389 crore |
| FY 2022-23 | ₹2,210 crore |
| FY 2023-24 | ₹3,631 crore |
The increasing allocations reflect the government’s sustained support for UPI-based digital payments and merchant adoption.
India’s Digital Payment Success Story
The statement highlighted India’s remarkable achievement in global digital payments. According to the ACI Worldwide Report 2024, India processed 49% of all global real-time transactions in 2023, establishing itself as the world leader in digital payment innovation.
Exponential UPI Transaction Growth
UPI transaction values have shown extraordinary growth over recent years:
- FY 2019-20: ₹21.3 lakh crore
- March 2025: ₹260.56 lakh crore
- P2M transactions alone: ₹59.3 lakh crore
This massive increase demonstrates growing merchant acceptance and consumer trust in digital payment methods across India.
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