No GST on UPI Transactions Over ₹2,000, Clarifies Finance Ministry

New Delhi, April 19:The Ministry of Finance on Friday categorically denied reports suggesting that Goods and Services Tax (GST) would be levied on Unified Payments Interface (UPI) transactions above ₹2,000. The Ministry clarified that no such proposal is under consideration and labeled the circulating claims as "false, misleading, and without any basis."

Amid rising concerns over taxation on digital transactions, the Finance Ministry issued an official statement to quash speculation. "The claims that the Government is considering levying GST on UPI transactions over ₹2,000 are completely false. Currently, there is no such proposal before the Government," it stated.

No GST Since No MDR
GST is typically applicable to certain service charges, such as the Merchant Discount Rate (MDR), which is levied on transactions using specific payment instruments. However, since January 2020, MDR has been removed for Person-to-Merchant (P2M) UPI transactions, following a Gazette Notification issued by the Central Board of Direct Taxes (CBDT) on December 30, 2019.

"In the absence of MDR, there is no applicable GST on these UPI transactions," the Finance Ministry emphasized, reinforcing that UPI continues to remain a zero-cost transaction method for users and small merchants.

Government Incentive Scheme for UPI
To further boost digital payment adoption, especially among small businesses, the government has implemented an Incentive Scheme for P2M UPI transactions since the financial year 2021–22. The scheme aims to support digital infrastructure and ease the financial burden on small merchants by reimbursing transaction costs.

So far, the scheme has witnessed steady growth in allocations:

• ₹1,389 crore in FY 2021–22

• ₹2,210 crore in FY 2022–23

• ₹3,631 crore in FY 2023–24

These figures reflect the government’s continued commitment to fostering a cashless economy and nurturing a vibrant digital ecosystem.

India Leads Global Real-Time Payments
According to the ACI Worldwide Report 2024, India accounted for an impressive 49% of global real-time transactions in 2023, further cementing its status as a global digital payments leader.

UPI transaction volumes have also grown dramatically. From ₹21.3 lakh crore in FY 2019–20, the total transaction value has surged to ₹260.56 lakh crore by March 2025. Notably, P2M transactions now stand at ₹59.3 lakh crore, indicating growing trust among merchants and consumers alike.

The Finance Ministry reiterated that it remains fully committed to encouraging digital payments through initiatives that support innovation, ease of use, and financial inclusion — without imposing burdens such as GST on basic digital transactions.