Aaj Ki Janta

NEW DELHI – The Finance Ministry on Friday (April 18, 2025) dismissed reports suggesting that the government is considering levying Goods and Services Tax (GST) on Unified Payments Interface (UPI) transactions above ₹2,000. Terming the claims “completely false, misleading, and without any basis,” the ministry emphasized that no such proposal is under consideration.

“There is no such proposal before the government,” the official statement read, putting to rest widespread speculation about potential taxation on high-value UPI payments.

The ministry explained that GST is applicable only on service charges like the Merchant Discount Rate (MDR), which are associated with specific payment modes. However, since January 2020, MDR has been eliminated for person-to-merchant (P2M) UPI transactions, effectively removing any GST liability on such payments.

UPI has witnessed a phenomenal rise in adoption, with transaction values soaring from ₹21.3 lakh crore in FY 2019–20 to ₹260.56 lakh crore by March 2025. This surge has been largely supported by the government’s continued push for digital payments.

To further encourage low-value UPI transactions, especially beneficial for small merchants, the government launched an incentive scheme in FY 2021–22. Under this initiative, ₹3,631 crore was paid in FY 2023–24—an increase from ₹2,210 crore in the previous fiscal—highlighting the government’s ongoing commitment to promoting a cashless economy.

“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.