The Ministry of Finance has firmly denied the recent claims suggesting that the government plans to impose GST on UPI transactions exceeding ₹2,000. In a statement issued on Friday, the ministry called these claims false, misleading, and completely baseless.
“There is no such proposal under consideration,” the ministry clarified.
To clear up the confusion, it’s important to note that GST is typically applicable only on certain charges—like the Merchant Discount Rate (MDR)—which are applied to payments made through specific instruments.
However, since January 2020, the Central Board of Direct Taxes (CBDT) eliminated the MDR on person-to-merchant (P2M) UPI payments. As a result, no MDR is being charged, and therefore, no GST applies to UPI transactions at this time.
UPI’s Massive Growth
UPI payments have skyrocketed in recent years. From ₹21.3 lakh crore in 2019-20, the total transaction value has surged to ₹260.56 lakh crore by March 2025.
Government’s Push for Digital Payments
To further encourage the adoption of UPI, especially among small merchants, the government has been running an incentive scheme since 2021-22. This scheme targets low-value P2M UPI transactions, helping merchants cut down on transaction costs and encouraging broader usage.
In 2022-23, the government paid out ₹2,210 crore under this initiative.
In 2023-24, this amount rose to ₹3,631 crore.
“These consistent payouts show the government’s strong and ongoing support for UPI-based digital payments,” the ministry added.
