No plan to levy GST on UPI transactions above ₹2,000: Finance ministry

THE GOVERNMENT has clarified that it is not mulling to levy GST on unified payments interface (UPI) transactions above ₹2,000 (£17.66).

The finance ministry said the reports that the government is considering levying Goods and Services Tax (GST) on UPI transactions over ₹2,000 was false and clarified it has no such proposal at the moment.

GST is levied on charges, such as the Merchant Discount Rate (MDR), relating to payments made using certain instruments.

Effective January 2020, the Central Board of Direct Taxes (CBDT) has removed the MDR on person-to-merchant (P2M) UPI transactions.

"Since currently no MDR is charged on UPI transactions, there is consequently no GST applicable to these transactions," the ministry said.

UPI's share in digital payments has surged from 34 per cent in 2019 to 83 per cent in 2024, making it the dominant mode for retail payments.

The ministry also said the government remains committed to promoting digital payments via UPI.

To support and sustain the growth of UPI, an incentive scheme has been operational from FY2021-22.

This scheme specifically targets low-value UPI (P2M) transactions, benefiting small merchants by alleviating transaction costs and promoting wider participation and innovation in digital payments. (PTI)