New Delhi, April 11, 2025 — The Ministry of Finance has officially denied media reports suggesting that the government is planning to impose Goods and Services Tax (GST) on UPI transactions over ₹2,000. In a firm statement, the Ministry labeled these claims as “false, misleading, and baseless.”
No GST on UPI Transactions, Says Government
Refuting rumors, the Ministry clarified:
“There is no proposal under consideration to levy GST on UPI transactions above ₹2,000. Such reports are without any merit.”
The clarification comes in response to misinformation circulating on social media and news platforms, raising concerns among UPI users and merchants.
Why GST Is Not Applicable on UPI Transactions
The Finance Ministry explained that GST is only levied on service charges such as the Merchant Discount Rate (MDR). However, in the case of UPI, no MDR is applied for Person-to-Merchant (P2M) transactions.
This policy was formalized by the Central Board of Direct Taxes (CBDT) through a Gazette Notification dated December 30, 2019, effective from January 2020.
Government Support for Digital Payments
To further promote the growth of digital payments, especially low-value UPI (P2M) transactions, the government has implemented a UPI Incentive Scheme starting from FY 2021-22. The scheme benefits small merchants and consumers by encouraging wider usage and innovation in cashless transactions.
Here is the year-wise allocation under the scheme:
| Financial Year | UPI Incentive Allocation |
|---|---|
| 2021–22 | ₹1,389 crore |
| 2022–23 | ₹2,210 crore |
| 2023–24 | ₹3,631 crore |
These figures highlight the government’s sustained push to make India a global leader in digital payment infrastructure.
India Leads the World in Real-Time Digital Transactions
According to the ACI Worldwide Report 2024, India accounted for a whopping 49% of global real-time digital transactions in 2023, reaffirming its leadership in the digital economy space.
The Unified Payments Interface (UPI) has seen massive growth in transaction volumes and values:
| Year | Total UPI Transaction Value |
|---|---|
| 2019–20 | ₹21.3 lakh crore |
| 2024–25 | ₹260.56 lakh crore (Projected) |
Of this, P2M transactions alone have crossed ₹59.3 lakh crore, a testament to increasing merchant adoption and consumer trust in the system.
