Will UPI Payments Above Rs 2,000 Attract GST? Here's What Finance Ministry Said

The Indian government has refuted claims that it plans to impose GST on UPI transactions over Rs. 2,000. Currently, there is no MDR on UPI transactions, eliminating any GST liability.

Finance Minister Nirmala Sitharaman.

Source : PTI

The central government clarified on Friday that it is not mulling levying GST on UPI transactions above Rs 2,000. Clarifying the reports that said that the government is considering levying Goods and Services Tax (GST) on UPI transactions over Rs 2,000, the finance ministry said they are completely false, misleading, and without any basis.

"Currently, there is no such proposal before the government," the ministry said in a statement.

The claims that the Government is considering levying Goods and Services Tax (GST) on UPI transactions over Rs 2,000 are completely false, misleading, and without any basis. Currently, there is no such proposal before the Government: Ministry of Finance pic.twitter.com/dRaHRNOy5m

— ANI (@ANI) April 18, 2025

"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 added.

The UPI transaction has seen an exponential growth, increasing from Rs 21.3 lakh crore in FY 2019-20 to Rs 260.56 lakh crore by March 2025.

The ministry further said that 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. In 2023-24, the government paid Rs 3,631 crore under the scheme, up from Rs 2,210 crore in 2022-23. The total incentive payouts under this scheme over the years reflect the government's sustained commitment to promoting UPI-based digital payments," the ministry noted.