No GST on UPI Transactions Above 2000: Finance Ministry Clarifies
New Delhi | April 19, 2025
The Finance Ministry on Friday categorically denied reports suggesting the imposition of Goods and Services Tax (GST) on UPI transactions exceeding ₹2,000. Calling the claims “completely false, misleading, and without any basis,” the Ministry said that no such proposal is currently under consideration.
The clarification came in response to social media and media speculation about a possible GST levy on high-value Unified Payments Interface (UPI) transfers. “There is no such proposal before the government,” read the official statement from the Ministry.
GST is generally applicable on charges like the Merchant Discount Rate (MDR) for certain payment instruments. However, since January 2020, the Central Board of Direct Taxes (CBDT) has removed MDR on person-to-merchant (P2M) UPI transactions. As a result, “no GST is applicable to UPI transactions,” the Ministry explained.
UPI continues to be a cornerstone of India’s digital payment ecosystem. Transaction volumes have grown exponentially—from ₹21.3 lakh crore in FY 2019-20 to ₹260.56 lakh crore by March 2025.
Reaffirming its commitment to digital India, the government said it remains focused on promoting digital transactions. An incentive scheme supporting low-value P2M UPI transactions has been in place since FY 2021-22. The scheme, aimed at helping small merchants absorb transaction costs, saw incentive payouts of ₹3,631 crore in 2023-24, up from ₹2,210 crore the previous year.
“The total incentive payouts under this scheme over the years reflect the government’s sustained commitment to promoting UPI-based digital payments,” the Ministry concluded.
