The Finance Ministry has firmly denied recent reports suggesting that the government is planning to impose Goods and Services Tax (GST) on Unified Payments Interface (UPI) transactions exceeding ₹2,000. In a clear statement, the ministry called such reports “false, misleading, and baseless,” and confirmed that no such proposal is currently under consideration.
UPI transactions, especially person-to-merchant (P2M) payments, are not subject to GST, as no Merchant Discount Rate (MDR) is charged on them. The government had waived MDR on these transactions in January 2020, and since GST is levied only on service charges like MDR, the exemption means no GST is applicable on UPI payments as of now.
The Ministry also highlighted the dramatic rise in UPI transaction volumes over recent years. From ₹21.3 lakh crore in 2019–20, UPI transaction value soared to an estimated ₹260.56 lakh crore by the end of FY 2024–25 — a testament to its widespread adoption and growing trust in digital payments.
To continue encouraging digital transactions, the government has been running an incentive program since FY 2021–22 that reimburses small merchants for low-value P2M UPI transactions. In FY 2023–24 alone, ₹3,631 crore was disbursed under this scheme, up from ₹2,210 crore the previous year.
This sustained financial support underlines the government’s firm commitment to promoting a cashless economy through innovative digital payment systems like UPI.
