The Ministry of Finance clarified in a statement on Friday on the claims that the government is considering levying Goods and Services Tax (GST) on UPI transactions over Rs 2,000.
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Finance Ministry clarifies
The Ministry dismissed these claims, calling them false, misleading, and without any basis.
"Currently, there is no such proposal before the government," the statement read. [Source: Live Mint]
GST is levied on charges, such as the Merchant Discount Rate (MDR), on payments made using certain instruments.
Effective January 2020, the Central Board of Direct Taxes (CBDT) 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 said.
UPI transaction values have increased exponentially from ₹21.3 lakh crore in FY 2019-20 to ₹260.56 lakh crore by March 2025.
The ministry also shared that the government remains committed to promoting digital payments via UPI.
The government initiated an incentive scheme from FY2021- 22 to support and sustain the growth of UPI.
This scheme is specially for low-value UPI (P2M) transactions, benefiting small merchants by alleviating transaction costs and promoting wider participation in digital payments.
The government paid ₹3,631 crore under the scheme in 2023-24, from ₹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.
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