Government Clarifies No GST on UPI Transactions of over Rs2,000
Moneylife Digital Team 21 April 2025
The ministry of finance has issued an official statement refuting claims that the government is considering imposing goods and services tax (GST) on unified payments interface (UPI) transactions exceeding Rs2,000. The statement, released on 18 April 2025, through the Press Information Bureau (PIB), categorically dismisses these rumours as "completely false, misleading, and without any basis," confirming that no such proposal is currently under consideration.
 
The government clarified that while GST is levied on charges related to payments made using certain instruments, such as the merchant discount rate (MDR), no MDR has been charged on person-to-merchant (P2M) UPI transactions since January 2020, following a central board of direct taxes (CBDT) notification issued on 30 December 2019. As a result, no GST is applicable to UPI transactions.
 
The statement reaffirms the government's commitment to promoting digital payments through UPI, highlighting the incentive scheme operational since FY21-22 specifically targeting low-value UPI transactions to benefit small merchants. The government has demonstrated its dedication through substantial financial allocations under this scheme: Rs1,389 crore in FY21-22, Rs2,210 crore in FY2022-23, and Rs3,631 crore in FY23-24.
 
These initiatives have contributed significantly to India's digital payments ecosystem. According to the Automated Clearing House International Worldwide Report 2024, India accounted for 49% of global real-time transactions in 2023, cementing its position as a global leader in digital payments innovation. UPI transaction values have grown exponentially from Rs21.3 lakh crore in FY19-20 to Rs260.56 lakh crore by March 2025, with P2M transactions reaching Rs59.3 lakh crore, reflecting increasing merchant adoption and consumer confidence in digital payment methods.
Comments
kalemohan
1 month ago
good.but what about medical insurance policy instalments?
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