The Government has firmly denied reports suggesting that Unified Payments Interface (UPI) transactions exceeding ₹2,000 might attract Goods and Services Tax (GST). In an official statement, the Ministry of Finance clarified that no such plan exists and the circulating claims are unfounded and misleading.
“The claims that the Government is considering levying Goods and Services Tax (GST) on UPI transactions over ₹2,000 are completely false, misleading, and without any basis. Currently, there is no such proposal before the Government,” the Ministry said in a release.
The clarification emphasized that GST applies only to service charges like the Merchant Discount Rate (MDR) — which, for Person-to-Merchant (P2M) UPI payments, has been waived since January 2020.
The Government also highlighted its consistent efforts to encourage the growth of digital payments, particularly through the UPI Incentive Scheme, which has provided financial support to banks for promoting low-value P2M UPI transactions. The allocation under this scheme has steadily risen: ₹1,389 crore in FY 2021-22, ₹2,210 crore in FY 2022-23, and ₹3,631 crore in FY 2023-24.
“To support and sustain the growth of UPI, an Incentive Scheme has been operational from FY 2021-22. 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,” it said.
India’s UPI ecosystem has seen exponential growth, with total transaction value soaring from ₹21.3 lakh crore in FY 2019-20 to ₹260.56 lakh crore by March 2025. Merchant transactions alone have crossed ₹59.3 lakh crore, reflecting widespread adoption.
The Government reaffirmed its commitment to supporting digital payments and dismissed speculation of any new tax burden on UPI users.
